Ann Inc. Under Pressure of Activists asking it to explore a sale option
Activists have asked Ann Inc, women's apparel retailer, to explore a sale. On Monday, Engine Capital LLP and Red Alder LLC announced that they both have sent a combined letter to the board of directors.
In the letter, the hedge funds have shared that even after having discussion over future of the company the management has not taken the decision to explore a sale. The hedge funds expressed their disappointment with the company. Both of them in unison own more than 1% of outstanding shares of Ann.
In response to the letter, the New York-based parent of the Ann Taylor women's apparel store chains, released a statement and affirmed that they are always open to discussions with their shareholders and value the inputs given by them.
"Our board and management team are committed to creating value for all Ann Inc. shareholders, and we will continue to take actions to accomplish this goal and position the company for growth and success", further stated the parent company.
As per the activists, the company is underrated and this factor has provoked the firms' investment. The retailer trades at 5.5 times Ebitda, said the activists. Owing to leveraged buyouts taken place over the past few years, the company is valued between 8 times and 9 times Ebitda.
Both of them, Red Alder and Engine Capital, believe that Ann can be worth $50-$55 per share to a private equity firm. Engine Capital thinks that Ann should carry out a strategic review. To conduct the review, a committee should be formed having independent board members who have their own legal and financial advisers.
FBR Capital Markets analyst Susan Anderson said that the fund's stake is so small that it would not be possible for it to drive change alone and would need support from other investors.
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