Ethan Allen Interiors Inc. rose as much as 6.8 percent in New York after the head of activist hedge fund Sandell Asset Management Corp. called the furniture seller an ideal private-equity takeover candidate.
Ethan Allen could be worth $40 a share if it spun its properties into a real estate investment trust, or fetch $37 a share if acquired by a private-equity firm, Tom Sandell said Wednesday at the CNBC Institutional Investor Delivering Alpha Conference in New York. The company’s real estate accounts for half of its current market capitalization, he said.
“They have so much real estate -- 70 stores, eight manufacturing plants, a 200-room hotel which serves as a conference center” and 18 acres of land in Connecticut, he said. The company is also almost debt-free, Sandell said.
After rising as high as $31.78, Ethan Allen shares drifted down to $30.24 by the close in New York, a 1.6 percent gain for the day. The stock remains down 2.4 percent for the year. Sandell Asset, founded in 1998, is one of the largest holders of Danbury, Connecticut-based Ethan Allen, Tom Sandell said.
Ethan Allen released preliminary fourth-quarter results Monday that fell short of analysts’ estimates, citing a “short-term disruption” caused by investment in new products and an improved website. The company, which reports final earnings July 28, said net sales fell abut 2.6 percent. Analysts had projected they rose 2.2 percent.
Sandell Asset’s recent campaigns include Brookdale Senior Living Inc., JDS Uniphase Corp. and SemGroup Corp. The activist also won four board seats in a proxy contest at Bob Evans Farms Inc.
Activist investors acquire equity stakes in publicly traded companies and push executives and directors to make changes they believe will boost shareholder returns.