UK: Mothercare rejects two Destination Maternity takeover bids
Mothercare has rejected two takeover approaches from US firm Destination Maternity
Destination Maternity said it contacted Mothercare on 1 June to propose a cash and shares takeover. This would see a combination of the two companies under a new UK holding company, listed in the US.
Its offer was worth 300 pence per share, a 29% premium on the firm's closing price of 232.5 pence on 1 July.
The company had made its first approach to Mothercare in May and said it had not ruled out a revised bid.
Mothercare shares were up 11.71% to 259.73 pence at 09:43 GMT today on news of the takeover bid.
Destination Maternity said it was disappointed the board of Mothercare had so far refused to engage in any discussions regarding the proposals.
"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 CEO Ed Krell.
"Mothercare and Destination Maternity are highly complementary businesses, with strong and trusted brands in their respective markets. Together, a combined company would provide a global platform to expand both Destination Maternity's maternity apparel business and Mothercare's baby and children's business."
Mothercare has been facing an uphill struggle since it issued a profit warning in January. A month later and chief executive Simon Calver stepped down after less than two years in the role.
In May, the company reported a 61% jump in annual profits, leaving analysts optimistic the baby and children's goods retailer may show further improvement going forward, able to put a challenging year behind it.
International sales - up 2.5% in its last fiscal - however, have been performing better than UK sales, which dropped 1.9%.
Former Shop Direct and Next Directory executive Mark Newton-Jones, who took over as interim chief executive on 17 March, is now steering the company forward until a replacement is found.
Mothercare did not return a request for a comment at the time of going to press.
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