Major shareholders of retailer Best & Less Group (ASX: BST) have indicated they would accept a takeover offer from private equity firm BBRC and Australian businessman Ray Itaoui that values the company nearly $12 million less than its current market capitalisation.
Brett Blundy’s BBRC - a retail investor with interests in brands such as Louvisa (ASX: LOV) and Bras N Things - and Honey Birdette co-founder Ray Itaoui who sold the company for $443 million in 2021, lobbed a $1.89 per share takeover offer this morning for the entirety of Best & Less.
In total, the deal is worth approximately $237 million, nearly $12 million less than BST’s market capitalisation of $248.9 million at the close of trade last Friday when shares in the company finished up at $1.99.
BST lead independent director Stephen Heath acknowledges that the consortium’s offer does not contain a ‘typical control premium’, but says the company will consider the proposal considering two of the retailer’s major shareholders have expressed their interest in accepting the offer.
According to Best & Less, major shareholders Allegro and Bignor Family Pty Limited will accept the proposal on the terms proposed.
Allegro holds 32.43 per cent of the BST shares on offer, and Bignor - a company associated with executive chairman Jason Murray - holds 8.27 per cent of the group. Combined, the pair satisfies the minimum acceptance threshold considering BBRC already has a 16.45 per cent interest in Best & Less.
According to BST, an independent board committee has been formed to evaluate and respond to the takeover offer, but directors are yet to give shareholders their own recommendation.
“While the offer does not contain a ‘typical control premium’, we have received statements from both Allegro and Bignor that they each intend to accept the offer in the absence of superior proposal. Accordingly, the IBC has determined that the takeover offer should be made available to all shareholders recognising that the decision as to whether to accept the offer or not will be based on individual shareholder preferences,” Heath says.
“We will carefully consider the proposal and provide a formal recommendation in our target’s statement, and we will also commission an independent expert’s report.
“That being said, we note that the offer will provide an ability for shareholders who wish to exit large shareholdings in BLG (Best & Less Group) to do so in an orderly fashion without unduly impacting the company share price.”
The independent director added that shareholders and the company would be in good hands under Brett Blundy’s watch.
“Similarly, the minimum acceptance condition also provides a real opportunity for all remaining shareholders who wish to remain invested in the company to do so in an entity that, should control pass under the takeover offer, is ultimately controlled by Brett Blundy, an individual with a strong track record of delivering value in the retail sector,” he says.
In the meantime, the Best & Less board says it intends to otherwise conduct its business in the ordinary course and will not make any material changes to ongoing operations. This includes the planned appointment of former The Iconic boss Erica Berchtold as CEO from 4 September 2023.
BST adds that it is supportive of shareholders having the opportunity to consider the takeover proposal.
“BBRC has been a cornerstone investor in BLG since its initial public offering in 2021,” the company says.
“If the takeover offer is made and acceptances are received from Allegro and Bignor, that would result in BLG becoming controlled by entities associated with BBRC and Ray Itaoui.
“The BLG board is supportive of BLG shareholders having the opportunity to consider the takeover offer while recognising the potential opportunity for BLG shareholders to remain investors alongside BBRC.”
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