Apparel chain Talbots has signed a merger deal to buy all outstanding shares of ladies' wear retailer The J Jill Group for about US$517m.

Talbots will pay $25.05 per share in cash, funded by a new $400m credit facility as well as cash on hand.

The transaction is expected to be accretive to Talbots' financial 2007 earnings, including synergies.

Arnold Zetcher, Talbots chairman, president and chief executive officer, said: "This transaction brings together two great brands, which share a strong customer-first culture and serve distinct yet complementary segments of the age 35+ female population.

"J Jill's focus on apparel for a sophisticated casual lifestyle, with artistically inspired styles, provides a perfect counterpoint to Talbots offering of updated modern classics."

Zetcher continued: "Working together, we expect to capture the significant growth potential of the J. Jill brand and enhance shareholder value. We believe our proven expertise in managing a complex multi-channel operation will enable us to maximise the cost synergies of our similar business models, particularly in back-office functions."

Talbots currently plans to operate separately the businesses' merchandising, stores, catalogue, web, marketing, visual and store design.

Gordon Cooke,J Jill chairman, president and chief executive, commented: "J Jill has evolved over the past ten years from a multi-brand, catalogue-only, market-sourced company to a successful multi-channel, private-label, national retailer.

"We have opened 200 stores in the past six years while maintaining a significant presence in both catalogue and the internet.

"...we are very pleased about our combination with Talbots. In addition to providing a premium to J Jill shareholders, this transaction is an excellent strategic fit for us.

"Talbots is a highly successful organization and operates a business model almost identical to that of J Jill."

Talbots ended financial 2005 with 1,083 stores and revenues of about $1.8bn, while J Jill finished the year with 200 stores and about $450m of revenues.

The combined company will be a leading multi-channel specialty retailer targeting the age 35+ market with 2005 pro forma annual revenues of approximately $2.3bn, and 1,283 stores located in 47 states, the District of Columbia, Canada and the UK.

Talbots is a specialty retailer and cataloguer of women's, children's and men's apparel, shoes and accessories.

J Jill is a multi-channel specialty retailer of women's apparel, including accessories and footwear.