As Relational Investors discusses options to create value for shareholders in Abercrombie & Fitch, the activist could have a seat on the company’s nine-member board in its sights, according to a person familiar with the matter.
The San Diego, Calif.-based asset manager increased its stake in Abercrombie & Fitch in the second quarter, according to regulatory filings. It approached the company in June, and the resultant meetings produced measures to cut costs and curtail expansion in conjunction with the teen retailer’s August earnings.
Abercrombie & Fitch is working with Goldman Sachs to evaluate Relational’s proposal, according to three people familiar with the matter. (Read More:Abercrombie & Fitch Retains Goldman in Face of Pressure.)
Those measures could take roughly two quarters to see results, at which time, the person said, Relational could make other moves — including seeking a board seat for David Batchelder, a founder and principal at Relational said to be spearheading the Abercrombie investment. (Read More: 10 Best Cities for Shopping.)
Batchelder is no stranger to the retail industry: He successfully pushed for the ousting of former Home Depot CEO Robert Nardelli and was awarded a board seat following Nardelli’s exit. Batchelder stepped down from the Home Depot board in 2011.
Shares of Abercrombie rose as much as 7 percent intraday following CNBC’s reporting that the company had hired Goldman Sachs as an adviser — positive momentum that some investors say could stoke interest from potential private equity buyers. (Read More:Abercrombie's Profit Sinks as Fashions Evolve.)
Though Relational, according to sources, has yet to suggest a take-private to Abercrombie management, it would be unlikely to oppose a bid should it emerge.
Relational “wouldn’t oppose anything that would be in the interest of the shareholders,” according to a person familiar with the firm’s strategy.
—By CNBC's Kayla Tausche