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Don't Dismiss Abercrombie Deal Talk

If the idea that some retailer might be interested in taking over Abercrombie & Fitch Co. surprises you, you're not alone.

In today's dour retail climate, why would any company want to buy a struggling teen specialty brand that hasn't been relevant since its appearance in

? Its sales are shrinking, it hardly owns any real estate, and most of its stores are housed in traffic-dwindling malls.

Yet shareholders pushed Abercrombie stock higher by as much as 10 percent Wednesday on a Reuters report it was in deal talks with unnamed suitors. The Wall Street Journal later reported American Eagle Outfitters Inc. and Express Inc. were among the potential bidders.

As it turns out, there is a case to be made for an Abercrombie buyout.

For one thing, it's a bargain. Its shares have plunged 50 percent in the past year. Its market value, as high as $4 billion five years ago, is now well below $1 billion.

More importantly, a private equity buyer or a strategic buyer such as L Brands Inc. could snag Abercrombie's crown jewel -- Hollister -- on the cheap, while getting the rest of the company...