2nd Jul 2014 10:42
LONDON (Alliance News) - UK-based mother and baby products retailer Mothercare PLC Wednesday said it rejected two takeover offers from US-based maternity apparel retailer Destination Maternity Corp, the last worth about GBP266 million, because it felt they undervalued the company.
Earlier Wednesday, Destination Maternity confirmed that it had submitted two non-binding written proposals to Mothercare, which were rejected.
In a statement Wednesday, Mothercare said that it is confident of growing the company independently, and said the proposals were of "insufficient value".
"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. Mothercare has a very strong and valuable international business and significant potential for sustained improvement in the UK," said Mothercare Chairman Alan Parker in a statement.
Mothercare has been struggling in the UK for several years as a result of the economic downturn and due to increased competition from online competitors. In response to the downturn, the retailer streamlined its UK retail operations by closing loss-making stores, but expanded internationally. It has also been developing its online presence.
Destination Maternity's latest proposal was for a combination of the two companies under a new UK holding company, which would be listed in the US. Under the offer, Mothercare shareholders would receive 300 pence for each Mothercare share, which would comprise 230 pence in cash and shares in the new holding company.
The latest proposal represented an increase of 9% to 20% to the original proposal made by Destination Maternity of 250 pence to 275 pence for each Mothercare share.
Mothercare currently has a market capitalisation of GBP230.7 million.
"We believe there is a compelling strategic rationale for a combination of Destination Maternity and Mothercare, which would create the undisputed global leader in maternity, baby and young children's apparel and products," said Destination Maternity Chief Executive Ed Krell in the company's statement earlier Wednesday.
The US company said it is still to evaluating its options with regard to Mothercare.
Mothercare shares were up 11.7% at 259.58 pence before midday Wednesday.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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