Abercrombie & Fitch Co. (NYSE: ANF) shares
plummeted as much as 16.4 percent in Monday’s premarket trading on news that it had terminated talks for a potential
sale.
The board announced in a press release that the best conceived way to increase shareholder value is through pursuit of its
enduring strategy.
“We believe in the prospects for our business and the opportunities for our brands,” Executive Chairman Arthur Martinez said in
the announcement. “We are generating solid comp store sales momentum at Hollister and continue to refine and implement strategies
to position the Abercrombie brand for revitalized performance.”
The company does not intend to comment further on previous transaction talks.
Since late 2016, Abercrombie fielded interest
from multiple suitors, including American Eagle Outfitters (NYSE: AEO) and Express, Inc. (NYSE: EXPR), and engaged each in preliminary discussions.
However, many were dubious
of acquisition prospects from the start.
“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.”
At time of publication, shares of Abercrombie were down 10.53 percent at $10.88 in the premarket session Monday.
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