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Restore board unanimously rejects Marlowe proposal

By Josh White

Date: Thursday 05 Aug 2021

Restore board unanimously rejects Marlowe proposal

(Sharecast News) - Restore explained its board's unanimous rejection of Marlowe's possible offer for the company in an update on Thursday, describing it as a "highly opportunistic approach".
The AIM-traded firm said the offer "significantly undervalues" Restore, considering its current and future prospects, adding that the transaction structure, with its "very high" Marlowe equity element of 87%, would bring "material uncertainty and risk" to Restore's shareholders.

It said the combination of Marlowe and Restore was not strategically compelling, adding that a combination with Marlowe would dilute Restore's quality of earnings and cash generation, and constrain its investment-driven growth opportunity.

There was also significant shareholder support against the offer, with seven shareholders representing 33.3% of Restore's issued share capital having stated that they did not intend to accept an offer on the terms set out in Marlowe's announcement of 22 July.

Restore said it was "exceptionally well-placed" to create significant shareholder value as a standalone business, with a "clear strategy" to continue to grow through organic expansion, strategic acquisitions and margin improvement.

The board said it was focussed on maximising value for shareholders, and considered the Marlowe proposal in detail, taking into account an established valuation framework.

It concluded that the Marlowe proposal fell "significantly short" of a level that would merit engagement and the granting of due diligence access.

Given that the Marlowe proposal significantly undervalued Restore and its future prospects, had an unattractive structure and was accompanied by a strategic rationale with which it fundamentally disagreed, the board said it had unanimously rejected the Marlowe proposal.

"Under the experienced leadership of Charles Bligh and his senior management team, the board has every confidence in Restore's standalone prospects," said non-executive chairman Martin Towers.

"Restore is performing exceptionally well as we continue to grow, winning market share, delivering strategic acquisitions and implementing our already successful strategy - all of which will create significant shareholder value.

"In summary, the combination of Restore and Marlowe is not strategically compelling, given that it would only result in creating an unfocused diversified business services conglomerate."

Towers said Marlowe's approach "significantly" undervalued Restore's current and future prospects, with the board believing that the structure, with a "very significant" element of Marlowe equity, bringing "material risk" to Restore's shareholders.

"I would remind shareholders that only 71p of the Marlowe proposal is in cash.

"Shareholders are strongly advised to take no action in relation to the Marlowe proposal."

At 1151 BST, shares in Restore were down 0.98% at 505p.

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