News Column

Ann Taylor Pressured to Sell

August 25, 2014

Associated Press

A big shareholder in the Ann Taylor chain is ratcheting up pressure on its parent company to explore a sale.

Engine Capital LP and its partner Red Alder LLC sent a letter Monday to the New York company urging the board to consider a sale, among other options. Engine Capital believes the company, which also owns Loft stores, is an "an incredibly suitable candidate" for private equity, particularly given the advantageous financial conditions right now.

"It is uncertain how long the credit markets will remain favorable, and we therefore encourage the (board) to act with a sense of urgency so that this significant opportunity does not slip away," the letter stated.

The retailer's shares jumped almost 5 percent before the opening bell.

Engine Capital and Red Alder, which control more than 1 percent of Ann's shares, said Monday that after holding private discussions over the past couple weeks, they decided to take their campaign public.

With new private equity involved, Engine Capital sees potential for aggressive cost cuts.

The shareholders also note that a strategic buyer could pay more than a private equity firm, and a large international retailer could speed up the company's global brand expansion.

Ann said that welcomes communication with its shareholders, and its board and management are committed to creating value for all stock owners.

Earlier this year another private equity firm, Golden Gate Capital, revealed a 9.5 percent stake, though it has not pushed for a sale and it has called the company "well-managed."

Ann Inc. has a market value of more than $1.7 billion. Shares have climbed more than 9 percent in the past year as of Friday.


Original headline: Pressure for sale at Ann Taylor grows more intense

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