Why Charming Shoppes' Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Lane Bryant and Fashion Bug parent Charming Shoppes (NAS: CHRS) were flying high today, gaining as much as 24% in intraday trading after the company agreed to be acquired by Ascena Retail Group (NAS: ASNA) .

So what: Ascena, which is the parent of the dressbarn, maurices, and Justice brands, is planning to pay $890 million, or $7.35 per share. Ascena's management pointed to Charming Shoppes as a good strategic fit, as it builds on the company's focus on "unique customer [niches]." For Charming Shoppes, the deal was lauded as a good outcome from the company's late-2011 strategic review, as shareholders are getting a 25% premium over yesterday's stock price and an 89% premium over the stock price before the strategic review.

Now what: At the close of trading today, Charming Shoppes shares were trading at $7.31, or within less than 1% of the proposed takeover price. The fact that there's such a small gap there and that traders aren't boosting the price over the offer price suggests that there's little doubt about whether the deal will be completed and not much expectation that another suitor will step in to try breaking it up with a higher offer.

With that in mind, Charming Shoppes investors probably want to start considering where to redeploy the funds they currently have invested in that stock.

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