Activist Sandell Asset Management Corp. has accumulated 1.6 million shares, a 5.5% stake, in furniture retailer Ethan Allen Interiors Inc. and is pushing for a sale or a recapitalization of the company, it said on Friday. New York-based Sandell said it sent a letter on Aug. 14 to Farooq Kathwari, the chief executive of Ethan Allen, claiming that the company is worth about $41 per share, or more than 30% above where the stock is trading. The Danbury, Conn.-based furniture brand closed Thursday trading at $30.99 per share, and in early morning trading on Friday is at $31.49 per share, up 1.6% on the news. It should be noted, however, that the company is trading near its 52 week high of $32.63 per share. The firm criticized Ethan Allen for its ‘sub-optimal fiscal policies and inefficient allocation of shareholder capital,’ which it said is to blame for what it views as a discounted price per share, despite Kathwari’s nearly 30 years of experience leading the company. The hedge fund further claimed that Ethan Allen has underperformed its peers over the past 10 years by 119%. Sandell said Ethan Allen has real estate worth about $450 million, or about $16 per share, that could be monetized. Another criticism of Ethan Allen was that even though interest rates are near historic lows, it has negative net debt.
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