Market Overview

Amid Takeover Reports, Abercrombie & Fitch Flies On Eagle's Wings

Amid Takeover Reports, Abercrombie & Fitch Flies On Eagle's Wings

Abercrombie & Fitch Co. (NYSE: ANF) soared more than 12 percent Wednesday afternoon on a Dow Jones report that Cerberus Capital Management and American Eagle Outfitters (NYSE: AEO) were collaborating on a joint acquisition and intend to close a deal within a month.

None of the involved parties responded to requests for comment.

Much to the surprise of analysts, the bidders are expected to face continued competition from Express, Inc. (NYSE: EXPR) and other private equity firms remaining in auction for the teen clothing brand.

Earlier this month, Wunderlich Securities expressed surprise that anyone would buy the retailer, which has recently crumbled alongside brick-and-mortar peers.

“We believe the potential, especially for material premium for ANF, is minimal and we see little potential for a transaction at a current time,” Wunderlich analysts Eric Beder and Bryan Caronia wrote in a May 11 note. “We believe that there is very limited market of strategic buyers which would pay a cash premium for a declining concept in a declining market.”

Oppenheimer also acknowledged the firm’s lacking appeal, with “international profitability...still eroding and balance sheet concerns mounting.”

Nonetheless, Abercrombie has turned heads for a while, with October rumors suggesting private equity interest.

Abercrombie shares faded off the daily high to trade up 6.6 percent at $13.09 at time of publication.

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Image Credit: By Ruehl boi11386 at English Wikipedia, CC BY-SA 3.0, via Wikimedia Commons


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