Shares of Ann Inc. jumped 5.2 percent following the disclosure that the retail chain and private equity firm Golden Gate Capital are holding ongoing discussions.
The stock closed at $38.71 in Big Board trading. More than 1.6 million shares changed hands, compared with a three-day average volume of 780,340 shares.
News that the two signed a nondisclosure agreement was disclosed Tuesday after the markets closed. The agreement provides for the “sharing of certain nonpublic information,” Ann said. Golden Gate’s investment fund, Golden Gate Capital Opportunity Fund, previously had taken a 9.6 percent stake, or nearly 4.4 million shares, in the retailer in March. Ann said that, since then, the two have been having an ongoing “collaborative dialogue” and that they will continue to have discussions “on a more detailed basis.”
The confidentiality agreement, filed on Wednesday with the Securities and Exchange Commission, said the discussions are connected with Ann’s “continuing review of options reasonably available to it for enhancing shareholder value.”
In August, investors Engine Capital and Red Alder began pushing the retailer to consider a sale of the company. Ann said last month it has met with the two funds and that its board has reviewed their presentations. Ann also said the retailer’s board regularly reviews all options available to the company, noting that, while the board “appreciates the input of Engine Capital and Red Alder, none of the analyses contained in their presentations is new to the board.”
Randal J. Konik of Jefferies & Co. said on Wednesday the agreement is a “good thing.” While a takeover of the women’s specialty chain is not guaranteed, he noted that Ann will benefit from the discussions with the private equity firm.
Konik reiterated his “buy” rating.
Golden Gate has experience in retail investments, which include Express Inc., Pacific Sunwear of California Inc. and Eddie Bauer Inc.