Abercrombie & Fitch Co. (NYSE:ANF) has revealed that it is interested in a buyout and it is currently in merger talks with numerous interested parties.
Abercrombie & Fitch is an apparel line that deals with clothing for teens but the firm has been having a hard time generating profits and maintaining the business. This is perhaps one of the reasons why the company has decided to put itself up for sale. The apparel chain has hired the Perella Weinberg Partners investment bank to handle the merger dealings. Two unnamed sources told Reuters that the bank will be handling the talks with interested parties.
Abercrombie & Fitch’s decision to choose the direction of a merger was most likely because an acquisition would offer the company a chance to survive the storm that it is currently experiencing. The firm hopes that the decision will help breathe new hope into the slowing demand for its products.
“There can be no assurance these discussions will lead to a definitive agreement or that a transaction will be consummated,” Abercrombie stated on Wednesday.
Abercrombie has roughly 900 stores spread out across the U.S. and its market value is slightly below $1 billion. The tough time is especially due to the heavy competition from rivals such as H&M and Zara. The company was very popular especially with high schools especially at the beginning of the 21st century. Its sales hit a record high of $4.5 bililion just four years ago but things soon took a turn for the worse, thus necessitating a change of strategy.
Other than helping Abercrombie to recover from slow sales, its acquisition would most likely be strategic especially for any firm seeking to expand its network since the apparel retailer already has a well-established network of stores. American Eagle Outfitters (NYSE:AEO) is one of the few companies that have expressed their interest in Abercrombie.
Abercrombie & Fitch shares closed the latest trading session on Wednesday at $14.22, after a 12.23 percent surge from the previous session.
