HEAR - Turtle Beach gains amid potential 'war' with activist investor after board appointment

Gaming headphone maker Turtle Beach ( NASDAQ: HEAR ) rose 3.4% at least partly after an analyst said he sees the appointment of new director as potential a declaration of war with activist investor Donerail.

Turtle Beach (HEAR ) announced on Wednesday that it was appointing Terry Jimenez to the company's board of director.

"At face value, the release is benign," Wedbush analyst Michael Pachter wrote in a note. "However, the act may constitute a breach of contract and the declaration of legal war with activist shareholder, Donerail."

Pachter argued that the appointment of a new director prior to adding a Donerail principal may be a potential breach of a  contract that the Turtle Beach and Donerail had agreed to in May, which including Donerail not purchasing more than 9.9% of the outstanding shares.

"With shares trading near book value, we think Donerail is positioned to buy a substantial portion of outstanding shares, and will resume its attempt to take over the company," Pachter, who has an outperform and $12 price target on Turtle Beach ( HEAR ) wrote. "Let the battle commence."

Pachter expects a "lot of noise" over the next few weeks and expects the shares to rise in the coming weeks should Donerail seek a takeover.

Donerail didn't immediately respond to Seeking Alpha email request for comment.

The new board appointment comes after Turtle Beach shares plunged 32% on Aug. 8 after the company announced that it had ended plans to sell itself.

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