Troubled retailer Mothercare rejects two bid approaches from American rival that chairman Alan Parker claims under-values chain
Troubled retailer Mothercare has rejected two bid approaches from an American rival that chairman Alan Parker claims under-values the chain.
Destination Maternity, which owns the Pea In The Pod and Motherhood Maternity chains, offered 300p a share, valuing Mothercare at £266m. It is the latest example of US firms seeking to buy British brands to benefit from lower corporate taxes.
Mothercare has struggled to make its British business compete with online players and the supermarkets. It has been slow to establish budget lines and has been cutting its store network.
It also lost its chief executive Simon Calver in February following a string of profits warnings.
Destination Maternity’s offer was a 29 per cent premium to Tuesday’s 232.5p closing price, and news of the bid sent the shares up 8.39 per cent or 19.50p to 252p.
Parker said: ‘The board has given these proposals full and thorough consideration. We do not believe they reflect the inherent value of Mothercare to our shareholders or its prospects for recovery and growth. In addition, we have significant concerns about the deliverability of these proposals.’
The first bid from Destination Maternity was made on June 1. Chief executive Ed Krell said he was not giving up, adding: ‘We are seeking to engage with the board of Mothercare on a constructive basis with the goal of completing a recommended transaction.’
The Nasdaq-quoted firm, which has 1,906 stores, has been given until July 30 to make a firm bid or walk away. It wants to set up a separate company to benefit from lower British tax rates.
Edison Investment Research analyst Niall Shah said: ‘The challenge for Mothercare’s interim chief executive is to prove to shareholders he really has a viable turnaround plan to insure Mothercare can return to profitable ways as a stand-alone business.’
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