Hanover to Be Taken Private?

Just as it finally announced sales gains in some of its core catalog titles (see “Hanover Direct Releases Preliminary Sales Results”), Weehawken, NJ-based Hanover Direct received a proposal from Chelsey Direct, its largest shareholder, to take the company private—but at a far-from-premium price.

Chelsey Direct has offered to acquire all shares of company stock it doesn’t already own for $1.25 a share. On Feb. 23, the day the offer letter from Chelsey was dated, the share price had opened at $2.10 and closed at $2.75.

Chelsey Direct already owns approximately 69% of Hanover Direct’s common stock and 100% of the company’s Series C preferred stock; it controls 91% of the voting shares of Hanover, according to documents filed with the Securities and Exchange Commission. In the offer letter, Chelsey says it wants to take Hanover private due to the financial drain and what it sees as limited benefits of remaining a public company.

Hanover’s board of directors has not yet reviewed this proposal.

For fiscal 2005, Hanover’s Company Store and Domestications decor titles, as well as its Silhouettes catalog of plus-size women’s apparel, enjoyed sales increases. But the International Male and Undergear catalogs, which sell men’s clothing, saw sales declines.

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