Hotter owner Unbound mulls possible takeover by WoolOvers Group
Unbound Group is the latest stock exchange-listed British business to be considering a takeover offer that may be well above its market capitalisation based on its recent share price, but is still far below its all-time high.
On Tuesday, the owner of the Hotter comfort shoes brand said it’s in discussions with WoolOvers Group Limited “in relation to a possible cash offer for the entire issued and to be issued share capital of Unbound”.
WoolOvers is a knitwear and lifestyle brand that targets a similar customer group to Unbound’s Hotter and operates both in the UK and online abroad. Earlier this month it acquired the Scotts Ltd business in a pre-pack deal.
Any Unbound deal would mean shareholders receiving 10.5p in cash “and 1 contingent value right per Unbound share”.
The cash part of the possible offer represents a premium of around 162.5% to the Unbound closing share price on Monday, although that gap has since closed with the share price doubling to 8p in early trading on Tuesday. However, a year ago, the shares were changing hands at nearly 34p each.
The total bid approach values the firm at just £6.8 million, although its current market value based purely on the 8p share price is below £3 million.
The board said it “would be minded to recommend an offer by WoolOvers Group in the event that WoolOvers announces a firm intention to make an offer”.
The approach comes after Unbound reported disappointing trading two months ago and a focus on efficiency and cost control.
It said that trading for the year to early February saw a sales slowdown with a “challenging” second half.
The prolonged heatwave, postal service industrial action and broader economic conditions all “significantly impacted” sales of its AW22 range in the final five months of last year”.
That was clearly a disappointment after a stronger start to the year and meant full-year revenue expectations were scaled back to a rise of 3%-4% at £53 million-£54 million. It also forecast a pre-IFRS16 adjusted EBITDA loss of £0.75 million-£1.25 million.
The company has recently transformed its business model from simply operating the Hotter brand to running a platform with multiple partner brands that target its core 55+ customer age group.
Only last summer it raised £4.3 million in expansion cash via a stock exchange share placing.
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