Ann Inc. Shareholder Urges Sale for Estimated $2.5 Billion

Actress Kate Hudson, brand ambassador for Ann Inc.’s Ann Taylor stores, introduced this week a capsule LBD collection designed in partnership with Ann Taylor creative director Lisa Axelson

Actress Kate Hudson, brand ambassador for Ann Inc.’s Ann Taylor stores, introduced this week a capsule LBD collection designed in partnership with Ann Taylor creative director Lisa Axelson

New York—Yet another retailer is being urged to sell.

Engine Capital LP, which along with Red Alder LLC controls “in excess of 1%” of Ann Inc.’s stock, said in a joint letter to the company’s board that Ann Inc. would be worth between $50 and $55 a share to a private equity firm or even more to a “strategic buyer”.

The valuation represents a premium of as much as 47% to Ann’s Friday closing price of $37.52, which values the parent of the Ann Taylor and Loft at $1.72 billion.

An offer for $50 to $55 per share would be worth about $2.29 billion to $2.52 billion, according Reuters calculations based on Ann’s shares outstanding as of August 2.

“… We think the status quo is untenable,” said Engine Capital, which describes itself as “a value-oriented special situations fund that invests both actively and passively in companies undergoing change.”

The fund said Ann should also appoint a special committee to conduct a strategic review if that committee consists only of independent board members with its own legal and financial advisors as it was “concerned about management intentions and, in particular, are aware of (CEO Kay) Krill’s preference for the status quo of remaining a public company.”

Moreover, Engine Capital said if Ann’s board decided that a sale was not in the best interest of shareholders, each board member should buy back stock roughly worth twice their annual compensation as “a sign of confidence.”

The fund also asked Ann to consider borrowing $600 million to buy back a third of its stock at $40 a share, which it said would “better enhance shareholder value relative to the status quo”.

Ann said in a statement it welcomed communications with its shareholders and that the board and management team were “committed to creating value” for all shareholders.

Earlier this year, private-equity firm Golden Gate Capital disclosed a 9.5% stake in Ann IInc., saying it believed the stock was “significantly undervalued”.

 

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