It hasn't been the easiest few years for Mothercare, what with it posting losses of £21.5m last year, issuing a profit warning in January and Simon Calver, the man brought in to turn things around, throwing in the towel in February after just two years at the helm. So US-based Destination Maternity presumably thought it could snap up the babywear retailer at a bargain basement price.
Not so: the Philadephia-based company said this morning that Mothercare has rejected two takeover offers, the latest of which was worth 300p per share, a 29% premium on last night's closing price of 232.5p. It added that its previous offer was in May, and that it hasn't ruled out making another.
Under the deal, the two companies will be combined under a new, UK-based holding company, and Mothercare shareholders will be paid 230p per share and issued shares in the new company at 70p each.
Rather appropriately, Destination Maternity talked about 'consummating' a merger, adding that it should be attractive to Mothercare shareholders. But although Mothercare itself stayed quiet this morning, it clearly doesn't agree - not at that price, anyway.
To be honest, a takeover (particularly by another retailer, rather than the usual private equity firm that tends to take over in these situations) might not be a terrible idea for Mothercare, whose share price has fallen 47% in the last year.
Source: Yahoo Finance
Ed Krell, Destination Maternity's chief exec, said that a merged company would be a 'global leader' in maternity, baby and children's products, with $1.7bn (£991m) in sales across 4,300 outlets. Importantly, it will also be able to use 'some of Mothercare's excess retail space' to establish stand-alone Destination Maternity stores, as well as improving Mothercare's ability 'to acquire customers earlier in their pregnancy'. That's nine months of extra custom, right there.
Us Brits may be inclined to complain about US takeovers, but this actually looks like a bit of a lifeline for Mothercare, whose annual report (published yesterday) shows sales dropped 19% in 2013, while net debt rose to £46.5m, from £32.4m the year before. It's also closed 91 stores in the last two years.
If its management can't do it, why not give the yanks a go? Investors - who sent Mothercare's share price up as much as 16% in early morning trading - are clearly keen.