US chain Destination Maternity retracts bid for UK baby-wear firm Mothercare
28 July 2014
US chain Destination Maternity has withdrawn its bid for UK maternity and baby-wear firm Mothercare, BBC reported.
The company said in a statement that it was clear that "only a very significant increase" in the offer would be acceptable to shareholders.
Mothercare had twice rebuffed acquisition proposals by Destination Maternity, which valued the mother and baby products retailer at £266 million.
According to the UK company, the bids did not reflect the firm's "inherent value".
Destination Maternity chief executive Ed Krell said he was "disappointed" that shareholders had not supported the proposal and that the board was unwilling to engage in discussions over the proposal, BBC said.
He added there was a strong strategic rationale for the combination of these highly complementary businesses, which would have enhanced the product range of both companies, spanning the pregnancy to toddler life-cycle.
Destination Maternity had 1,900 stores and was owner of the brands A Pea in the Pod and Motherhood Maternity.
Mothercare had been struggling recently and according to new boss Mark Newton-Jones it needed to modernise.
Newton-Jones took over at the beginning of the year after chief executive Simon Calver resigned following a profit warning.
Nasdaq-listed Destination Maternity said it had made three proposals to Mothercare's board with the last at 300 pence a share, valuing the business at £266 million.
However, Mothercare's board rejected the proposals. According to Alan Parker, chairman of the retailer, the proposals did not ''reflect the inherent value of Mothercare to our shareholders or its prospects for recovery and growth''. Mothercare also did not allow due diligence.
Following market hours Friday, Destination Maternity said that it was "withdrawing its proposal for a possible combination with Mothercare". The deadline was 30 July 30 to either make a firm bid or walk away.
According to the US group, its financial adviser, Bank of America Merrill Lynch, had canvassed the views of Mothercare's shareholders and realised that they would only accept ''a very significant increase in the value'' of a proposal, The Telegraph reported.
''In light of this and considering Destination Maternity has not been permitted by the Mothercare Board to conduct customary due diligence, Destination Maternity is unwilling to increase the value of its proposal and has therefore decided to withdraw its proposal.''