Mothercare rejects £226 million takeover offer from Destination Maternity
Destination Maternity, which operates 578 stores, revealed that it had put forward two proposals about a possible merger of the two companies, both of which were rejected by the Mothercare board.
The first proposal was submitted in May while a later proposal put forward on 1 June involved an increased offer of 300 pence per share that valued the company at £266 million.
In a statement issued today, Destination Maternity said the two businesses were “highly complementary” which together could provide a global platform to expand both Destination Maternity's maternity apparel business and Mothercare's baby and children's business.
Destination Maternity chief executive Ed Krell said: "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.
“We believe the combination would create a highly attractive opportunity to accelerate the growth and development of both businesses and generate substantial value for our respective shareholders. Given this, we are seeking to engage with the board of Mothercare on a constructive basis with the goal of completing a recommended transaction."
Mothercare, which also operates the Early Learning Centre stores, has been working to turn its UK business around by closing loss-making stores and improving its product range and multi-channel services.
In response to today's announcement by Destination Maternity, Mothercare 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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