Chelsey Moves to Take Firm Command of Hanover Direct

Nov 22, 2006 1:47 AM  By

In a move that all but ensures a going-private transaction, the board of directors at $407 million Hanover Direct unanimously approved a cash merger agreement with Chelsey Direct, its largest shareholder. The deal enables Chelsey to buy the remaining shares of Hanover that it does not already own.

Chelsey owns approximately 77% of the common stock and 92% of Hanover’s voting rights. The merger agreement provides for the acquisition of the shares of common stock of Hanover that Chelsey does not already own for a cash purchase price of $0.25 per share.

Weehawken, NJ-based Hanover’s catalogs include home decor titles The Company Store and Domestications and apparel brands Silhouettes and International Male. Earlier this year the long-troubled mailer’s board of directors had tapped New York-based investment bank Goldsmith, Agio, Helms & Lynner to conduct a valuation analysis. Agio concluded in November that Hanover’s enterprise value was less than the combined value of the secured debt and the outstanding preferred stock, and, therefore, worthless.

The enterprise value is calculated by adding a corporation’s market capitalization, preferred stock, and outstanding debt together and then subtracting the cash and cash equivalents found on the balance sheet.