Limited Brands Inc said late Wednesday (15 November) that it has reached an agreement to buy La Senza, the Canadian intimate apparel retailer with a network of global licensees, and reported a profit for the third quarter ended 28 October.

Limited has agreed to purchase all outstanding shares of La Senza for about CAD710m (US$628m), a premium of 47.8% to the value as of the closing price on the Toronto Stock Exchange of CAD32.65 on 14 November.

Upon consummation of the transaction, expected in mid-January 2007, the company will maintain its headquarters in Montreal, and its current management team - consisting of chairman and chief executive Irv Teitelbaum, vice chairman Stephen Gross, and president and chief operating officer Laurence Lewin - is expected to remain in place.

Lewin co-founded La Senza in 1990, and Teitelbaum and Gross together formed a predecessor firm, Suzy Shier, 40 years ago.

La Senza currently owns 318 stores in Canada and licenses 327 stores in 34 other countries. Limited's 3,534 stores include Victoria's Secret as well as Bath & Body Works, Express and Henri Bendel.

During the third quarter, Limited posted net income of $23.5m, or 6 cents a diluted share, one cent less than analysts' consensus estimates. This came against a year-ago loss of $683,000, or no cents a share. Sales ramped up 11.8% to $2.11bn from $1.89bn and advanced 10% on a same-store basis.

For the year-to-date, net income bounded 43.8% to $236m, or 59 cents a share, from $164.1m, or 40 cents. Sales rose 7.9%, to $6.65bn from $6.16bn, and were ahead 7% on a comparable basis.

The company expects fourth-quarter earnings per share to land between $1.07 and $1.14, including special items.

Speaking of the acquisition, Leslie Wexner, chairman and CEO of Limited, called La Senza "a great strategic fit with our intimate apparel business, and their international infrastructure, real estate expertise and operating model will also be great assets to us as we look to enhance our capabilities to meet our strategic growth initiatives internationally."

La Senza's Teitelbaum said: "This transaction recognises the significant progress we have made in streamlining our business and the strength of our balance sheet and cash flow.

"Given our companies' similar characteristics, we believe Limited Brands, together with Victoria's Secret, are ideal partners for us. This combination represents a major strategic step forward enabling us to continue to further pursue La Senza's growth opportunities."

Teitelbaum, Gross and Lewin, their beneficial interests and other holders of multiple voting shares have entered into a lock-up agreement. Collectively, they represent 48% of shares and options outstanding.

By Arnold J Karr.