Abercrombie & Fitch (NYSE:ANF) has filed a preliminary proxy statement to gain shareholder approval to reincorporate the company away from Delaware and into Ohio. NYTimes’ Dealbook states:
Abercrombie did not issue a news release announcing the move. In the filing, however, the company said that the move would relocate the corporation to where its main operations are in New Albany, Ohio, just outside of Columbus. In addition, the move will save it $180,000 a year in corporate taxes.
Abercrombie also stated that a reincorporation would afford directors under Ohio law “a clearer balance of corporate governance rights and obligations than Delaware law and would thereby enhance our ability to attract and retain highly qualified individuals to serve as directors.”
A clearer balance of corporate governance rights and obligations is a strange claim to make, with the bulk of companies reincorporating in Delaware specifically to gain greater clarity of corporate governance rights (Delaware, due to its unique history as being the primary point of incorporation in the country has the deepest source of caselaw and jurisprudence on matters of corporate law). Dealbook has a different theory, believing that ANF is reincorporating in Ohio to benefit from Ohio’s stricter anti-takeover rules that kick in at a lower level of acquisition, and, shockingly, disenfranchises arbitrageurs after an acquisition proposal is announced!
The Dealbook article does an excellent job of outlining how bad of a deal this is for current shareholders, as the acquisition catalyst becomes significantly more difficult to achieve.
Read the full article here.
Talk to Frank about ANF’s Reincorporation.
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