Destination XL advises shareholders to vote against FullBeauty merger

Destination XL Group (DXL) has advised shareholders to vote against its proposed merger with FullBeauty, saying the transaction is no longer in the best interests of the company or its investors.

The U.S. big and tall menswear retailer said it has filed a preliminary proxy statement with the U.S. Securities and Exchange Commission (SEC) in connection with its previously announced merger with FullBeauty. In the filing, DXL’s board of directors recommends that shareholders vote against the issuance proposal required to complete the deal.

The board said it had reassessed the merger in light of developments since the agreement was signed in December 2025 and concluded that the transaction was no longer advisable.

Among the factors cited were a more challenging consumer environment, FullBeauty’s level of indebtedness, concerns over the company’s potential negative equity value, and what DXL described as the “substantial economic dilution” its shareholders would face if the merger proceeds under the current terms.

Under the original agreement, FullBeauty shareholders were expected to own 55 percent of the combined company, while DXL shareholders would hold the remaining 45 percent.

The companies had expected the deal to close in the second half of 2026. However, the merger came under increased scrutiny after private investment firm Zodiac Partners launched an unsolicited bid to acquire DXL in May. The retailer rejected the proposal, saying it undervalued the company, before later recommending that shareholders reject a revised $0.84-per-share tender offer.