Ascena announced Monday it is acquiring Ann Taylor for $47 per share in cash and stock.
In a release on Monday morning, the retail companies said Ann Taylor stock holders will get $37.34 in cash, and 68 cents per share of Ascena stock in exchange for each Ann Taylor stock.
The deal is worth about $2 billion.
The $47 per share price tag represents a 21% premium over Ann Taylor's closing price of $38.71 on Friday.
Shares of Ann Taylor surged by up to 19% in pre-market trading on Monday. Ascena shares were higher but little changed.
"This powerful transaction joins two strong and highly complementary organizations and management teams and dramatically reinforces our leadership position in women's specialty apparel retailing," said David Jaffe, Ascena's CEO.
Ascena also said it has identified $150 million in annualized synergies that will come over three years. "Synergies include sourcing and procurement, distribution, logistics and other efficiencies," the statement said.
"Synergies" and other efficiencies makes employees nervous because it means their jobs could be on the line as the company cuts costs.