Mothercare has said it is “confident” in its future after US baby chain Destination Maternity dropped its bid to take over the business.
Destination Maternity made three failed attempts to woo the British baby goods retailer. It made an initial proposal on May 27 and another on June 1. Its last was on July 2, offering 300p per share, which valued the business at £266m.
Mothercare repeatedly rejected the offers, and blocked Destination Maternity’s attempts to carry out due diligence on the deal. Chairman Alan Parker said the bids did not “reflect the inherent value of Mothercare or its prospects for recovery and growth”.
The retailer’s US suitor had until July 30 to make another offer. After hiring Bank of America Merrill Lynch to canvass the opinions of Mothercare shareholders earlier this month, Destination Maternity said it was “clear” that shareholders believed “only a very significant increase” in the value of the proposal would be acceptable.
Shareholders had also raised concerns about the US retailer’s ability to finance the deal, concerns it said were unfounded. The company then withdrew its proposal on Friday evening (July 25).
This morning Mothercare said it is “fully focused” on its plans to turn around sales and it “remains confident in the ongoing execution of Mothercare’s strategy as an independent company”.
Destination Maternity chief executive officer Ed Krell said: “Destination Maternity’s management expertise and strong maternity apparel offering would have provided an attractive enhancement to the Mothercare UK turnaround plan.
“We are disappointed that the shareholders of Mothercare have not supported our proposal and that the board was unwilling to allow us to conduct due diligence and engage in discussions with us.
“We believe that there was a strong strategic rationale for the combination of these highly complementary businesses, which would have enhanced the product range of both companies. The combination would have created a global leader in maternity, baby and children’s apparel and products.”
The British baby goods retailer grew like-for-like sales 0.9% in the 15-week period to July 12, its first period of growth reported since October 2012.
Newton-Jones has said Mothercare needs to modernise, saying it requires “investment in its infrastructure, its stores and its head office systems”.
The news came on the same day Mothercare’s chief financial officer Matthew Smith resigned to join Debenhams, taking up the same role there. The company will now begin the search for a replacement while Smith works his 12-month notice period.