UK: Mothercare shareholders back Destination Maternity bid rejection
Mothercare said the two takeover offers don't reflect the inherent value of the company
The two offers, which were revealed last week, value Mothercare at GBP266m (US$457m).
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.
In response, Mothercare said the two takeover offers don't reflect the inherent value of the company and it questioned the deliverability of the proposals.
In a further development today, shareholder Allianz Global Investors said in a statement: "We're not interested in a bid. We think it was an inadequate offer that is well below the true value of the company. Mothercare has a great overseas business and there is a strong argument that this sort of business should be worth a very high multiple. We think the stock market has had it very wrong on Mothercare shares."
Paras Anand, head of European Equities at Fidelity Worldwide Investment, offered a similar sentiment: "Given the current absence of a chief executive at Mothercare currently, the approach by Destination Maternity could clearly be viewed as opportunistic.
"Whilst the group has to face the not inconsiderable task of stabilising the UK business, achieving this would allow the shares to more fully reflect the long term potential for development of the international business. On that analysis, we would prefer the business to continue in its current form, i.e. on a stand-alone basis, as the potential value creation could be significant."
Destination Maternity had made its first approach to Mothercare in May and said it had not ruled out a revised bid.
Destination Maternity Corporation (DMC) is a specialty designer and retailer of maternity clothing. The company's stores offer tops, bottoms, lingerie, coats, swimwear, active-wear, sportswear and bea...
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