The directors of value womenswear retailer Bonmarché have implored shareholders to reject a takeover bid by Edinburgh Woollen Mill owner Philip Day.
In April, Philip 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, Bonmarché’s directors unanimously recommend that shareholders reject the offer, which they say “materially undervalues” the company.
The note also adds that cost reduction measures, which have already been implemented, are expected to strengthen the business. “The delivery of this cost reduction programme should result in the improved operational and financial performance of the business.”
“Accordingly, the Bonmarché Directors consider that, whilst being both immediate and certain, the cash value of the offer is unattractive when compared to the shareholder value that the Bonmarché directors aim to create in the medium term.”
It posted a second profit warning in March after total sales for the 13 weeks to 29 December fell 8.1% year on year.
The business now estimates that the underlying loss before tax for the year will be between £5m and £6m.