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Women's clothing retailer Ascena Retail Group Inc will buy Charming Shoppes Inc for $857.2 million in an all-cash deal that will expand its plus-size clothing portfolio.

Ascena will pay $7.35 for every Charming Shoppes share - a 24.5 percent premium to the stock's close on Tuesday.

Charming Shoppes shares rose 24 percent to $7.30 in premarket trade on Wednesday, they closed at $5.90 on Tuesday on the Nasdaq. Ascena shares closed at $19.07 on Tuesday on the same exchange. They rose to $21 before the bell on Wednesday.

The total value of the deal was $890 million, the companies said in a statement on Wednesday. The deal is worth $857.2 million based on the number of Charming Shoppes shares on issue, according to Thomson Reuters data.

Bensalem, Pennsylvania-based Charming Shoppes, which has been grappling with flagging sales for four years, hired Barclays Capital in December to help it review its options.

The company's stock has jumped about 40 percent since it began reviewing alternatives and decided to shed the struggling Fashion Bug unit to focus on its flagship Lane Bryant brand.

The company, which also owns the Catherines brand, has been losing market share to rivals such as Ann Inc and Chico's FAS Inc.

Charming Shoppes operates more than 1,800 retail stores across the United States, specializing in plus-size clothing for women over the age of 35.

The transaction will be neutral or marginally add to Ascena's earnings in the first full year of combined operations, the companies said.

Ascena, valued at nearly $3 billion, sells clothes for women and pre-teen girls under the Dressbarn, Maurices and Justice brands.

BofA Merrill Lynch is acting as financial advisor and Proskauer Rose LLP is the legal advisor for Ascena, which will use available cash on hand and financing commitments to fund the deal.

Ascena is also said to be interested in bidding for the Sundance Catalog, a retailer owned by private equity firms and founded by Hollywood actor Robert Redford.