Bloomberg: Aeropostale Mulls Sale After Activist Pressure

(RTTNews) - Teen-clothing retailer Aeropostale, Inc. (ARO) has begun its process of exploring strategic options amid pressure from an activist investor, according to a Bloomberg report on Tuesday. The company is said to have contacted at least two private-equity firms related to the sale of the company.

New York-based beleaguered retailer is reportedly in talks with an investment bank to assist it in the sale process.

Activist investment firm Crescendo Partners, in a late November letter, urged the board of directors of Aéropostale to immediately start a broad sale process for the entire company to maximize shareholder value. It demanded that Aeropostale be sold to another apparel retailer or be taken private.

Crescendo said although Aéropostale has embarked on a turnaround to improve same-store sales trends and close underperforming stores, it believes those tasks are best accomplished as a private company.

Aeropostale has been losing money in four straight quarters. However, Crescendo said it believes numerous potential buyers will be interested in acquiring Aéropostale because of its strong brand name and its compelling valuation.

Crescendo noted that the letter that Aéropostale could be sold for between $14 and $16 per share and a price in excess of that range may be achievable, given the strength of the company's brand.

With the Aéropostale shares down 63 percent in the past three years, Crescendo said shareholders have suffered enough under the current Board and are entitled to a process that will maximize shareholder value.

Crescendo added then that it plans to nominate directors for the 2014 annual meeting to ensure that Aéropostale is taking the appropriate steps to maximize stockholder value.

Crescendo, together with its affiliates, is a significant shareholder of New York-based Aéropostale.

In September, private equity firm Sycamore Partners disclosed an about 8% ownership stake in Aéropostale.

In an earlier attempt to sell itself in 2011, Aeropostale reportedly did not find any buyers after it reaching out to few private-equity firms on a possible sale.

ARO closed Tuesday's regular trading session at $7.73, down $0.02 or 0.26% on a volume of 3.40 million shares. However, the stock gained $0.37 or 4.79% in after-hours trading.