Golden Gate has 9.5% S/O of ANN and is in best position to take company private. Reported $2B MC deal equals $44-$45, which is not $50-$55 but the company standalone with no takeover potential would trade at $32.50 (16x P/E of FY16 EPS ended Jan 16) to $34.00 (15x P/E CY16 EPS). A $45 deal price would be a 35% premium to the unaffected ANN $33.25 midpoint price. The high ANN stock price over the last five years (really, last year) was $43, so maybe Golden Gate agrees to a go-shop period in the DA to give the ANN Board a fiduciary out in case someone comes out of the woodwork with a higher priced proposal. From 2/20: ANN - Reported to be working with JPM on sale (first reported back in August) , Golden Gate has 9.5% S/O (signed Confidentiality agreement October 2014) , and two small shareholders sent letter to Board in August (believed could be $50-$55 takeover value from financial sponsor). ANN lowered 3Q Revs guidance in November and provided 4Q Revs estimate based on low-single digit same store sales decline. Hockey stick numbers for CY16E do not tell whole story - CY15 estimates for Revs, EBITDA and EPS have all declined significantly over the past year. An 8x forward multiple of $253M EBITDA (reflecting the achievability of hockey stick-like 15% YoY growth after a very poor 2014 and more conservative bank financing leverage - 5x debt/EBITDA, excluding ANN's $100M net cash which would mostly be used for deal-related expenses) implies $46.50/share or a 34% premium to the prior 20 day average closing price. The implied EV/Revs at that price are 0.77x EV/Revs ($2.61B, up 4.1% YoY) and 23.4x P/E ($1.99 EPS, up 35% YoY). At $50/share (low end of August 2014 range), the implied takeover multiples would be 0.84x EV/Revs, 8.6x EV/EBITDA and 25x P/E. Last, ANN had been reported to have hired a banker in late August, but no particular firm was mentioned.
Some background and attached November blog
http://www.sec.gov/Archives/edgar/data/874214/000119312514371135/0001193125-14-371135-index.htm
(Golden Gate 13da 10/14/14)
http://investor.anninc.com/phoenix.zhtml?c=78167&p=irol-newsArticle&ID=1977664
(ANN release re Golden Gate 10/14/14)
http://www.changeatann.com/home.html
(Red Engine Letter and Presentation)
http://investor.anninc.com/phoenix.zhtml?c=78167&p=irol-newsArticle&ID=1960597
(ANN Statement 8/25/14 to letter)
http://investor.anninc.com/phoenix.zhtml?c=78167&p=irol-newsArticle&ID=1967923
(Ann Reponse to Red Engine 9/15/14)