Gap Inc. To Separate Into Two Publicly Traded Companies - Quick Facts

(RTTNews) - Gap Inc. (GPS) announced plans to create two independent publicly traded companies: Old Navy, and a yet-to-be-named company or NewCo which will consist of the Gap brand, Athleta, Banana Republic, Intermix and Hill City. Upon separation, Gap Inc. shareholders are expected to receive a pro-rata stock distribution and as a result own shares in both NewCo and Old Navy in equal proportion. The transaction is currently targeted to be completed in 2020.

Gap Inc.'s current President and CEO, Art Peck, will hold the same position with NewCo after the separation. Following the separation, Sonia Syngal, current President and Chief Executive Officer of Old Navy, will continue to lead the brand as a standalone company. Gap Inc. expects to effect the separation through a spin-off that is intended to generally be tax-free to Gap Inc.'s shareholders for U.S. federal income tax purposes.

Also, Gap Inc. announced a plan to restructure the specialty fleet, including the closure of about 230 Gap specialty stores over the next two years. The company estimates an annualized sales loss of approximately $625 million as a result of the store closures. The company estimates pre-tax costs associated with these actions to be about $250 million to $300 million, with the majority expected to be cash expenditures. The company estimates that the actions will result in annualized pretax savings of about $90 million.

Gap Inc said it is actively working on multiple initiatives to revitalize the Gap brand. The company intends to modernize its marketing model to efficiently build engagement and loyalty.