Abercrombie & Fitch (ANF) Seeks To Reincorporate in Ohio Possibly To Thwart Unwanted Takeover
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Price: $105.02 -0.41%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 6.9%
Revenue Growth %: +4.2%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 6.9%
Revenue Growth %: +4.2%
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A preliminary proxy statement filed by Abercrombie & Fitch Co. (NYSE: ANF) last week will do little to slow down the takeover rumor mill on the teen retailer.
On Wednesday, Abercrombie disclosed that it is asking shareholders to approve a reincorporation of the Company from Delaware to Ohio.
The company cited four reasons that it wants to reincorporate into Ohio:
While the company is citing four reasons for the reincorporation, according to the New York Times none of the first three reasons are very compelling. However, the fourth reason listed "Address Corporate Governance Matters" could be the real reason.
According to the Times, You can interpret this statement a number of ways, but no doubt Abercrombie will benefit from Ohio’s stricter anti-takeover rules. This includes Ohio’s business combination statute that, unlike Delaware’s business combination statute, is set off when a shareholder acquires 10 percent or more of Abercrombie instead of the 15 percent threshold in Delaware.
More important, Ohio also has a control share acquisition statute.
Despite the disclosure, shares of Abercrombie & Fitch are down 0.6 percent today. Last Thursday, shares were up 0.6 percent.
On Wednesday, Abercrombie disclosed that it is asking shareholders to approve a reincorporation of the Company from Delaware to Ohio.
The company cited four reasons that it wants to reincorporate into Ohio:
- Operational Benefits and Commitment to Ohio: We conduct the vast majority of our operations from our home office in New Albany, Ohio (other than our stores) and the vast majority of our full-time employees or, as referred to by the Company, “associates,” are Ohio residents. Given our significant operational presence in Ohio, we are committed to supporting the Ohio business community and believe that reincorporating into Ohio is an appropriate means to fulfill this commitment.
- Reduce State Tax Liability: Reincorporating into Ohio would save us approximately $180,000 per year by decreasing our overall state tax liability.
- Address Corporate Governance Matters: Reincorporating into Ohio would provide the Company with an opportunity to address a number of corporate governance matters in a manner that we believe appropriately protects and benefits the Company and its stakeholders.
- Enhance Ability to Attract and Retain Qualified Directors: We believe that Ohio law affords directors a clearer balance of corporate governance rights and obligations than Delaware law and would thereby enhance our ability to attract and retain highly qualified individuals to serve as directors.
While the company is citing four reasons for the reincorporation, according to the New York Times none of the first three reasons are very compelling. However, the fourth reason listed "Address Corporate Governance Matters" could be the real reason.
According to the Times, You can interpret this statement a number of ways, but no doubt Abercrombie will benefit from Ohio’s stricter anti-takeover rules. This includes Ohio’s business combination statute that, unlike Delaware’s business combination statute, is set off when a shareholder acquires 10 percent or more of Abercrombie instead of the 15 percent threshold in Delaware.
More important, Ohio also has a control share acquisition statute.
Despite the disclosure, shares of Abercrombie & Fitch are down 0.6 percent today. Last Thursday, shares were up 0.6 percent.
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