Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Activist Tom Sandell Sends Letter to Ethan Allen Interiors Inc. (ETH) and Urges for Recapitalization or Sale of Company

Page 1 of 2

Tom Sandell‘s Sandell Asset Management‘s has sent a letter to the Chairman and CEO of Ethan Allen Interiors Inc. (NYSE:ETH), Farooq Kathwari, in which it expressed its belief that the stock is trading at a discount to its intrinsic value of around $41 per share. The investor, which holds around 1.60 million shares, equal to 5.5% of the company’s stock, considers that the undervaluation of shares is supported by a combination of sub-optimal fiscal policies and inefficient allocation of shareholder capital.

Thomas Sandell

Sandell also considers that Ethan Allen Interiors Inc. (NYSE:ETH), whose stock underperformed its peers by around 119% over the last decade, can enhance its shareholder value through recapitalization and monetization of its real estate holdings, or through a sale to a private equity firm. The investors consider that one of these paths could result in a value of at least $41 per share delivered to shareholders, which represents a 30% premium above the current price of the stock.

In this way, the blame for the company’s poor performance lies on the shoulders of the entire board of directors, four of whom have been sitting on the board for more than 10 years (including Kathwari, who was appointed to the board 27 years ago). Sandell added in the letter that it is prepared to nominate a slate of director candidates for election at the company’s 2015 Annual Meeting.

“As a final note, please understand that unlike many chief executives of publicly-traded companies that we have encountered, we hold you in higher regard for the meaningful amount of stock that you personally own. It is our hope that we can engage in immediate dialogue in order to devise a solution that will result in a dramatic enhancement of shareholder value,” Sandell concluded.

Mr. Sandell’s stance regarding Ethan Allen Interiors Inc. (NYSE:ETH) is not news, as he has previously pitched the company at the Delivering Alpha Conference that took place in New-York in June. Back then he said that the company has a very large real estate portfolio, worth around $450 million, which represents a value of around $16 per share, very little of which is reflected in the stock price. The investor added during the conference that the company could use to recapitalize and buy back stock. He also said that he was approached by some third parties, which expressed interest in acquiring Ethan Allen.

Tom Sandell
Tom Sandell
Sandell Asset Management

Ethan Allen Interiors Inc. (NYSE:ETH) is a $900 million interior design company that manufactures furniture and sells it through stores, which it owns. The company has eight manufacturing facilities in the US and two plants in Honduras and Mexico. Ethan Allen’s stock inched up by 2% on the back of Sandell’s letter, but it appreciated by more than 5% on July 15th during Sandell’s panel at the Delivering Alpha.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!