Briscoe owns New Zealand retail chains Briscoes Homeware, Rebel Sport and Living & Giving. In early July it offered the shareholders of outdoor gear retailer Kathmandu five Briscoe shares for every nine of Kathmandu’s, plus a cash offer of 20 cents per share. The offer values Kathmandu shares at $1.80 each.
Kathmandu’s directors say this offer does not reflect the company’s underlying value. Independent adviser Grant Samuel, who has been engaged by Kathmandu to review the offer, says the full underlying value of Kathmandu’s shares is between $2.10 to $2.41. The NZX currently values Kathmandu shares at $1.74.
The directors produced a seven-point list describing the ways in which Briscoe’s offer was unacceptable. Chairman David Kirk elaborated: “Briscoe’s offer is manifestly inadequate and does not reflect the value of Kathmandu’s shares.”
“The board believes the offer is intended to create value for Briscoe shareholders at the expense of Kathmandu shareholders. It comes opportunistically off the back of an isolated period of internal and external challenges experienced by Kathmandu in the period leading up to and including Q3 FY2015. I am confident that management can deliver strong results that will, over time, result in superior value for Kathmandu shareholders.”
Kirk told the shareholders in a letter that they owned part of a “high-quality company with a strong outlook.”
“Your directors have full confidence in management’s ability to deliver strong results from Kathmandu’s operations in the future. Your directors and management intend to continue to operate Kathmandu for the benefit of all shareholders. “
Kathmandu’s sales performance and earnings forecast for the year ending July 31 was included in the company’s statement. It shows 4.2 percent growth in sales and a 1.6 percent increase in gross profit, but EBITDA was down 36.5 percent.
Chief executive Xavier Simonet joined Kathmandu barely 24 hours before the takeover crisis hit. He said the company’s performance had recently improved, reflecting a promotional shift away from price and discount messaging.