Changes to Aeropostale (ARO) By-Laws May Suggest Potential to be Taken Private, Says Stifel

Stifel analyst Richard E. Jaffe noted a curious development at Aeropostale, Inc. (NYSE: ARO) that might suggest potential for it to be taken private.

Comments refer to a recent SEC filing that said:

"Effective as of January 26, 2016, Aéropostale, Inc. (the “Company”) amended and restated its Amended and Restated By-Laws (as amended and restated, the “Second Amended and Restated By-Laws”) to provide that any director or the entire Board of Directors of the Company may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors."

Jaffe said the news, "suggesting to us the potential for ARO to be taken private, given the ease with which an investor could take control of the company and put his own board of directors in place. We believe this makes the possibility of ARO getting bought out both easier and more likely."

The analyst continued, "The ownership of ARO shares is concentrated, with the top 5 shareholders owning approximately 35% of the shares outstanding. We believe that continued fundamental weakness, combined with the restated by-laws, makes a buy-out, perhaps led by Sycamore, more likely."

Jaffe added, "Despite our thoughts that a buyout is possible and would likely occur at a premium to the current share price, we reiterate our Hold rating as we believe the stock is fully valued on a fundamental basis."

For an analyst ratings summary and ratings history on Aeropostale, Inc. click here. For more ratings news on Aeropostale, Inc. click here.

Shares of Aeropostale, Inc. closed at $0.25 yesterday.

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