The board of Bonmarché is now advising shareholders to accept Edinburgh Woollen Mill owner Philip Day’s offer for the business, amid further tough trading at the struggling value retailer.
In April, Day’s Spectre Holdings purchased 52.4% of Bonmarché’s ordinary shares, triggering a mandatory takeover bid. Spectre offered to buy the remainder of the shares for the price it paid, 11.45p.
In a note to shareholders at the time, Bonmarché’s directors unanimously recommend they reject the offer, which they said “materially undervalues” the company.
However, following a difficult first quarter, the board said the offer was “more attractive in the short term”.
In a statement, Bonmarché said: “Whilst the board’s view remains that the offer does not adequately reflect the potential longer-term value of the business, the increase in uncertainty that has developed reflecting the trading and financial position of the business during the first quarter of the financial year makes the certainty represented by the offer potentially more attractive in the short term.
“As a result, the board of Bonmarché, which has been so advised by Investec as to the financial terms of the offer, is now of the view that the terms of the offer are fair and reasonable. The board therefore recommends that shareholders accept the offer, as they intend to do so in respect of their own beneficial holdings.”
The retailer said trading had been “poor” as as result of “continued weakness in the underlying clothing market, and a lack of seasonal weather to counteract it, particularly in June”. It added that there was “a significant degree of uncertainty” that the business could achieve its predicted profit before tax for the full year.
Nonetheless, Bonmarché insists that its medium- and long-term prospects are good once the near term has been weathered: “The board continues to welcome the opportunity to engage with Mr Day, who has, as yet, not taken up the offer to discuss future plans for the business, and believes that, with his sector experience, he would be a successful long-term owner.”