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Mothercare
Earlier this year, Mothercare's chief executive, Simon Calder, departed and the group had to renegotiate its borrowings. Photograph: Paul Faith/PA
Earlier this year, Mothercare's chief executive, Simon Calder, departed and the group had to renegotiate its borrowings. Photograph: Paul Faith/PA

Mothercare investors back rejection of £270m US takeover bid

This article is more than 9 years old
Shareholders Fidelity and Allianz lend support to maternity retailer following 'inadequate' offer from Destination Maternity

Mothercare's decision to reject a £270m takeover approach from US rival Destination Maternity has won the backing of two leading institutional shareholders, Fidelity and Allianz Global Investors.

Support for the board's position comes despite Destination Maternity's chief executive, Ed Krell – a former investment banker – last week flying to the UK to press the case for a deal.

"We believe there is a compelling strategic rationale for the combination, which would create the undisputed global leader in maternity, baby and young children's apparel and products," he said.

The row over how undervalued Mothercare might be came as a surprise to some in the City as the business has been struggling for years, issuing a series of profits warnings, particularly related to its 220 UK stores. Earlier this year, its chief executive, Simon Calder, departed and the group had to renegotiate its borrowings.

Mothercare chairman, Alan Parker, formerly chief executive of Whitbread, has insisted the approach from Destination Maternity was too low and did not "reflect the inherent value of Mothercare to our shareholders or its prospects for recovery and growth".

Shareholders are coming out in support of Parker. "We're not interested in a bid. We think it was an inadequate offer well below the true value of the company," Simon Gergel, head of UK equities at Allianz, told the Sunday Telegraph.

"Given the absence of a chief executive at Mothercare, the approach by Destination Maternity could clearly be viewed as opportunistic ... we would prefer the business to continue ... on a standalone basis," added Paras Anand, head of European equities at Fidelity.

More on this story

More on this story

  • Mothercare new boss to invest own £400,000 in £100m rights issue

  • Curse of Mothercare claims Destination Maternity chief

  • Mothercare rejects £266m approach from US firm Destination Maternity

  • New Mothercare head aims to overhaul loss-making UK chain

  • Poundland profits rise amid international growth plans

  • Argos extends eBay tie-up to bring click-and-collect service to 650 stores

  • Mothercare sales fall as UK slump outweighs international success

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