Bonmarché rejects majority owner Philip Day's takeover offer

Bonmarché has urged investors to take no action regarding Philip Day’s takeover bid, claiming that the offer of 11.44p per share “materially undervalues the business and its prospects”.


Bonmarché

Spectre Holdings, the company behind Edinburgh Woollen Mill owner Philip Day, was forced to make a cash offer for all Bonmarché shares it does not own under Rule 9 of the Takeover Code after acquiring more than 26.2 million shares from BM Holdings in April.

The transaction increased the firm’s interest in the clothing business to 52.4% of the existing issued share capital and voting rights.

But the Bonmarché board of directors, advised by Investec Bank, have unanimously rejected the offer. In a statement released Tuesday, the company emphasised that it had reviewed a number of cost reduction actions, and that some of these measures had already begun to be implemented.

The success of these efforts could deliver further value for shareholders in the medium-term, the board of directors said.

“It is the expectation of the Bonmarché directors that the delivery of this cost reduction programme should result in the improved operational and financial performance of the business. Accordingly, the Bonmarché directors consider that, whilst being both immediate and certain, the cash value of the Offer is unattractive when compared to the shareholder value that the Bonmarché directors aim to create in the medium term,” the statement read.

The proposed takeover valued Bonmarché, which has over 300 stores and concessions across the UK, at approximately £5.7 m. And it came at a tough time for the clothing retailer, following a  significant decline in profits and revenues in the year ended September 2018.

As the brand’s interim results showed, pre-tax profits fell sharply to £2.3m and turnover almost halved to £97.9m during a period marked by subdued consumer spending and widespread promotional activity. The retailer’s performance has continued to deteriorate since then, with the firm warning that underlying pre-tax loss for the year will be between £5m and £6m, instead of the £4m it had previously expected.

Spectre could be well positioned to help Bonmarché secure its long-term future. After all, Philip Day has previously acquired several distressed fashion retailers and helped them turn their finances around. Some of the firms he has added to his growing Edinburgh Woollen Mill group are Austin Reed, Jaeger and Berwin & Berwin.

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