Minority shareholders unhappy with Hanover Direct deal

By Staff -- Home Textiles Today, 12/29/2006 8:00:00 AM

Weehawken, N.J. – A pair of shareholders are battling in court over Hanover Direct’s potential acquisition by its largest shareholder, hedge fund Chelsey Direct.

Private investor Glenn Freedman and L.I.S.T. Inc. have amended a prior complaint against the company in Delaware Chancery Court. They allege the 25 cents per share Chesley proposes to pay in the acquisition is inadequate. They further allege that the retailer’s directors had conflicts of interest in approving the merger, and that Chelsey timed the proposed transaction opportunistically to disadvantage minority shareholders.

Hanover Direct’s stock has been trading at around 30 cents.

The plaintiffs are seeking class action certification. Their previous complaint involved Chesley’s initial proposal to take Hanover Direct private. That plan was later dropped.

Hanover Direct contends the complaint is without merit. The company expects to hold its annual shareholder meeting in March or April to put the merger to a vote.