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Takeover tussles: Briscoe Group and Kathmandu, plus others

  • News
  • July 28, 2015
  • Elly Strang
Takeover tussles: Briscoe Group and Kathmandu, plus others

Briscoe has now sent all Kathmandu shareholders a document seeking to acquire the remaining 80.1 percent shares it doesn’t already own.

As the company previous detailed, the offer is 89.7 million of its own shares and $32.3 million cash. 

This offer brings Briscoe Group managing director Rod Duke’s 80 percent stake in Briscoe down to 55 percent.

Duke emphasises the appeal of becoming part of a large trans-Tasman retail group to shareholders in the letter.

"By offering a combination of shares and cash, we are providing Kathmandu shareholders with the opportunity to share in the benefits we expect will be generated from combining the two retail businesses and forming a significantly larger trans-Tasman retail group."

Briscoe Group has been clear about the benefits of combining the businesses, peddling the power of a group that has annual sales that reach over $900 million.

However, it hasn’t detailed how it will bring back Kathmandu from its $1.8 million loss in the six months ending January 31 apart from pointing out its own stellar record.

Briscoe Group chair Rosanne Meo has said Kathmandu would benefit from Duke and his management team’s retailing expertise.

“They have established Briscoe Group as a leading retailer with 80 stores across New Zealand within the homeware and sporting goods retailing sectors,” Meo says.

From 2011 to 2015, Briscoe Group sales increased from $419 million to $507 million and earnings after tax from $22 million to $39 million.

As of 24 July, shareholders were advised by Kathmandu Holdings to take no action. It’s understood Kathmandu Holdings isn’t happy about the proposal.

Will Kathmandu reap the benefits if this takeover goes ahead?

We decided to explore other New Zealand takeovers and what resulted from them. Here are some high profile examples below.

Vodafone’s $840 million TelstraClear takeover (2012)


In 2012, Vodafone New Zealand took over Australia’s TelstraClear.

The move was heralded as a way for Vodafone to get the upper hand on Spark (then Telecom) in the local market.

Vodafone said the purchase makes it the leading challenger in the broadband market and the PayTV market.

Research AUT University released in 2011 before the takeover showed Spark had a 49 percent share of the home broadband market, while TelstraClear had 16 percent and Vodafone had 13 percent.

As of March 31 this year, Vodafone had 409,000 fixed broadband customers, down from 424,000 three months earlier.

According to NBR, it hasn’t yet overtaken its rival Spark. 

The publication reported Spark had 600,000 or so broadband customers in January this year.

Vodafone also posted a loss of $27.9 million in the 2014 financial year, its first loss in 13 years. This was despite revenue increasing 16 percent to $2.06 billion.

Woolworths buys EziBuy for $350 million (2013)



Australian company Woolworths bought the company from EziBuy’s founding shareholders Peter and Gerard Gillespie.

EziBuy houses brands such as Grace Hill, Capture, Emerge and Next.

At the time Woolworths said it was keen to invest in EziBuy’s next stage of growth.

EziBuy seems to have gone from strength to strength post-takeover.

It now says it is the largest omnichannel retailer in Australasia, as it has invested heavily in ecommerce and has over 500,000 customers.

It recently created The Brand Store, a younger, more fashionable shopping destination that carries both local and international brands.

The clothing dispatches from EziBuy’s distribution centre in Palmerston North, but can also be click and collected at chosen stores.

There are also plans to introduce homeware brands online.

Woolworth’s Limited’s general merchandise, which includes EziBuy, had revenues drop 3.5 percent in its February half-year results.

It also previously acquired Progressive Enterprises in 2005 for NZ$2.5 billion.

Woolworths and Foodtown brands were phased out in early 2012 and replaced by Countdown supermarkets.
 

Z Energy’s proposed takeover of Caltex for $785 million (2015)

Z Energy is planning on buying its rival Caltex, which is owned by Chevron New Zealand.

It made an application to the Commerce Commission for clearance to buy the rival a month or so ago.

The deal would give Z around 49 percent of the retail petrol station market.

It is already one of New Zealand’s top 20 publicly listed companies and has around 10,000 shareholders.

Z’s profit for the year ended March 2015 was $7 million, down $88 million from the year previous.

The slump in oil prices contributed to the loss.

With the proposed Caltex purchase, Z says competition wouldn’t be reduced in petrol and diesel sales.

It says this is because its independent distributors and retailers can still choose from their existing wholesaler supplier, BP and Mobil.

It says it won’t lift prices at Caltex stations, either.
 

Failed takeover: Pumpkin Patch (2015)



Troubled children’s clothing retailer Pumpkin Patch was seeking a buyer back in March and had said that “third parties” expressed interest in buying the business.

It was speculated that Briscoe Group’s Rod Duke might try stepping in and taking control of the company, as well as South African retailer Pepkor, which recently purchased Postie.

Its shares jumped to 42 percent the day after the company revealed this hopeful tidbit.

However, it announced in June its search for a buyer had failed.

Duke had instead gone after Kathmandu and there was no bite from Pepkor, either.

The NBR quoted an unnamed market source who said he was not surprised the review had not resulted in Pumpkin Patch's sale, considering the trouble that’s been plaguing the retailer.

“A capital raising has always looked very hard to me until it can prove the performance is going in the right direction. If they can’t demonstrate the business has a long term future, it’s hard to raise capital and hard to sell,” the source said.

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