The British retailer Mothercare saw shares jump 15% today, following its rejection of two takeover bids from a US company.
Destination Maternity, a rival, submitted two non-binding M&A proposals, both of which were turned down by the Mothercare board. The latest offer would have paid shareholders 230p per share, plus 70p in shares in the newly formed company, taking the total up to 300p per share – and bringing the retailer’s equity valuation up to £266m. This morning’s share price hike, however, puts Mothercare’s market capitalisation at £239m – higher than Destination Maternity’s current $316m (£184m) equity value.
“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 Ed Krell, Chief Executive of Destination Maternity.
But Mothercare remains unconvinced. Chairman Alan 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. Mothercare has a very strong and valuable international business and significant potential for sustained improvement in the UK.”
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