US retailer Destination Maternity has had two takeover bids for Mothercare rejected.
In a statement this morning (July 2), Destination Maternity said: “Destination Maternity confirms that it has submitted two non-binding written proposals to Mothercare about a possible combination of the two companies, which have both been rejected by the board of directors of Mothercare.”
Mothercare shares rose 15% in early trading on Wednesday to 267p.
Destination Maternity made an initial proposal on May 27 and another on June 1. Its latest proposal is for a combination of the two companies under a new UK holding company, which would be listed in the US. Mothercare shareholders would receive 300p for each Mothercare share, which today would comprise 230p in cash, and shares in the new holding company valued at 70p. The deal would value all the issued share capital of Mothercare at approximately £266m.
“Mothercare has refused to engage with Destination Maternity on its proposals,” the US retailer said. “Destination Maternity continues to evaluate its options with regard to a possible combination.”
Ed Krell, chief executive of Destination Maternity, said: “A combination of Destination Maternity and Mothercare would create the undisputed global leader in maternity, baby and young children’s apparel and products. Mothercare and Destination Maternity are highly complementary businesses, with strong and trusted brands in their respective markets. Together, a combined company would provide a global platform to expand both Destination Maternity’s maternity apparel business and Mothercare’s baby and children’s business.”
Destination Maternity is being advised by Bank of America Merrill Lynch and law firm Skadden, Arps, Slate, Meagher & Flom.