American Eagle Shares Surge as Speculation Mounts Over Retail Takeover

American Eagle Outfitters Inc. surged the most in almost two years in New York trading on speculation the Pittsburgh-based teen-clothing retailer may be a takeover target.

The shares rose $1.34, or 9.1 percent, to $16.03 at 4:01 p.m. in New York Stock Exchange composite trading for the largest gain since April 2009.

“It’s the takeover rumors starting up again,” said Brian Sozzi an analyst for Wall Street Strategies Inc. in New York. A deal would make sense for private equity because American Eagle has “a good brand and generates lots of cash,” he said.

The clothier, led by Chief Executive Officer James O’Donnell, faces increasing competition from teen retailers like Abercrombie & Fitch Co. and Aeropostale Inc., both of which reported gains in same-store sales last month. American Eagle had a market value of about $2.9 billion as of yesterday’s close.

Jani Strand, a spokeswoman for American Eagle, declined to comment.

The retailer lowered its fourth-quarter profit forecast last month after sales slumped 4 percent. Sales at stores open at least a year declined 6 percent in January. The company is scheduled to report results for the period on March 9.

To contact the reporter on this story: Matt Townsend in New York at Mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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