UPDATE: Abercrombie Delays Meeting To Drum Up Proposal Support

Abercrombie & Fitch Co. (ANF), facing resistance to its plan to reincorporate in its home state of Ohio, delayed a special meeting of shareholders it had scheduled for Monday, in order to drum up enough investor support for the move.

The teen retailer said in a proxy filing on Monday that it was "convinced" it had strong support for the move after "a succession of positive communications with a number of significant stockholders." But, general counsel Ronald Robins said, it has "been unable to obtain a strong consensus in favor of reincorporation at this point."

Company spokesman Eric Cerny said no timetable has been set to reconvene the special meeting.

A vast majority of major, public U.S. companies incorporate in Delaware, a state known for its expert corporate-law judges, who strike a balance between protecting shareholder rights and allowing a company's independent board of directors to make difficult decisions unfettered.

Abercrombie has cited several reasons for the move to its home state, namely saving money on Delaware filings, a commitment to Ohio, saving as much as $180,000 in annual tax liabilities and the ability to attract directors and rejig its corporate governance in a way it says "protects and benefits the company and its stakeholders."

The company has faced criticism from former lawyer and current law professor Steven Davidoff, who writes for the New York Times Dealbook under the moniker Deal Professor. He has argued that $180,000 isn't much money and Delaware corporations do just fine attracting directors, meaning Abercrombie has ulterior motives for the proposed course of action. He cites provisions in Ohio law that could either make it easier for management to buy the company or make it harder for suitors to acquire the company, both to the potential detriment of stockholders.

Abercrombie addressed at least part of Davidoff's criticism in a Securities and Exchange Commission filing last week, declining to comment on "rumors or speculation" about a management buyout, but noting that its proposal followed "well over a year and a half" of review. It added that proxy advisory firm Glass Lewis & Co. said recently that the move brings "positive changes to shareholders," and opined that "the positive aspects of the reincorporation greatly outweigh the negative provisions."

It is possible Abercrombie faces opposition from the several hedge funds numbered among its larger investors. Hedge funds often oppose measures that restrict their ability to sell to whatever buyer they want at whatever price they deem attractive.

Abercrombie and peer American Eagle Outfitters Inc. (AEO) are among the names often speculated as potential targets, particularly following a $3 billion takeout bid for rival J. Crew Group Inc. (JCG) from a team that included its chief executive in November.

Managers at a few of the hedge funds who hold Abercrombie stakes didn't respond to e-mails seeking comment.

Shares of Abercrombie were up 34 cents at $57.15 in recent Monday trading and are up almost 57% over the past year.

 
   -By Maxwell Murphy, Dow Jones Newswires; 212-416-2171; 
   [e-mail] 
   -Lauren Pollock contributed to this article.