Hanover Direct mulls over a private matter
Direct marketer Hanover Direct is considering an offer to go private. The company’s largest shareholder, Chelsey Direct LLC, which controls 91% of Hanover’s voting rights, is offering to acquire all outstanding common shares for $1.25 per share. Chelsey sent a letter to Hanover outlining its terms last week.
“The letter indicates Chelsey`s belief that the company should become privately owned due to the financial drain imposed by the company remaining public as well as the limited benefits to the company from maintaining that status,” Hanover says. The letter states that Chelsey and its affiliates propose to enter into a cash merger agreement with Hanover if the deal is approved.
Chelsey and its affiliates own approximately 69% of the issued and outstanding shares of Hanover’s common stock. In addition, Chelsey holds 100% of Hanover’s Series C participating preferred stock.
Hanover, No. 61 in the Internet Retailer Top 400 Guide to Retail Web Sites, says the proposal will be evaluated by a special committee of its board of directors consisting of independent directors. Hanover Direct spent all of 2004 and 2005 restructuring operations and getting its financial house in order. Over the last two years Hanover completed two audits, was the subject of an informal SEC inquiry and frequently filed its public financial records late.
In addition to operating e-commerce sites and publishing catalogs for brands such as International Male, Undergear, Silhouettes, The Company Store, Company Kids and Domestications, Hanover Direct operates Keystone Internet Services, a third-party technology and fulfillment company. The company expects to reports its final 2005 numbers in April. In 2004, Hanover had e-commerce sales of $118.7 million on total sales of $383.3 million.
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