- American Eagle is one of the most operationally efficient apparel retailers and has industry-leading operating margins, while Express is struggling.
- As pure speculation, I believe AEO could acquire EXPR to gain access to $1.7 billion in sales for an enterprise value of $450 million.
- AEO could apply its operational expertise, rationalize the supply chain, improve the product mix, and prudently finance an acquisition of EXPR.
- AEO might have to offer a control premium of >50%, but it would be a win-win for both shareholder groups.
For further details see:
My View On Why American Eagle Should Consider Buying Express