Shares of Aeropostale Inc (NYSE:ARO) surged in premarket trading this morning after Bloomberg announced that the clothing retailer was taking steps after being pressured by an activist investor. The stock climbed as much as 7% this morning.
Aeropostale explores strategic options
Bloomberg’s sources reportedly said that Aeropostale has spoken with two or more private-equity firms as the company looks into strategic possibilities. The retailer was said to have contacted investment banks as well for assistance in dealing with activist firm Crescendo Partners and also help with the steps needed for a sale of the company. However, Aeropostale is not yet in negotiations for a sale, according to those sources.
Aeropostale Inc (NYSE:ARO) has posted losses in the last four consecutive quarters, and in November, Crescendo sent the company a letter demanding that it either put itself up for sale or go private. The retail chain’s stock has fallen 37% over the last year, and the company’s market value was approximately $607 million at the close of trading on Tuesday. In Crescendo’s letter, the firm said Aeropostale could be worth between $14 and $16 per share.
Aeropostale attempts to restructure
Bloomberg’s sources also reportedly said that Aeropostale Inc (NYSE:ARO) has tried to restructure after an attempt to sell itself in 2011. At that time, the company did not find any buyers. The retail chain is hoping to make itself more attractive to buyers through restructuring.
Crescendo did not disclose the size of its stake in Aeropostale in the latter it sent, simply saying that it’s a “significant stockholder.” Sycamore Partners, a private-equity firm, had an 8% stake in September through its firm Hummingbird LLC. Also activist firm Eminence Capital, which is currently pressuring Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) to merge with The Men’s Wearhouse, Inc. (NYSE:MW) reportedly had a 5.4% stake in Aeropostale at the end of September, according to Bloomberg data.