Buzz Builds Over an Aeropostale Buyout

by Christopher Freeburn | October 8, 2013 11:11 am

Buzz Builds Over an Aeropostale Buyout

Aeropostale 300x199 Buzz Builds Over an Aeropostale Buyout[1]Investors are hoping that an equity firm will launch a bid[2] to take Aeropostale (ARO[3]) private.

Last month, Sycamore Partners revealed that it had acquired 8% of the struggling teen-apparel maker’s shares. Aeropostale stock has fallen by 58% since 2010, a decline that has outpaced rivals. However, analysts estimate that the investment firm could pay a premium of as much as 57% over the company’s current share price to buy it, Bloomberg notes.

According to an analyst at Avondale Partners, Aeropostale could be taken private for up to $15 a share, while a Bloomberg analysis suggests a price of about $16 a share. The company’s shares now trade above $9 after slumping sharply in August.

The price of any eventual leveraged buyout will hinge on Aeropostale’s success in boosting sales and profits. The retailer has overhauled its apparel lines to attract more interest from teens after reporting dismal quarterly results and falling same store sales[4].

Earlier this year, Sycamore acquired Hot Topic[5], an apparel maker targeting the young adult market, for almost $600 million.

Shares of Aeropostale fell more than 1% in Tuesday morning trading.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2011/05/Aeropostale.jpg
  2. that an equity firm will launch a bid: http://www.bloomberg.com/news/2013-10-07/aeropostale-seen-winning-57-lbo-premium-real-m-a.html
  3. ARO: http://studio-5.financialcontent.com/investplace/quote?Symbol=ARO
  4. reporting dismal quarterly results and falling same store sales: http://investorplace.com/2013/09/activist-bets-on-aeropostale-after-one-ugly-august/
  5. acquired Hot Topic: http://investorplace.com/2013/03/hot-topic-to-go-private-for-600m/

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