Reject Shop Pushes To Reject Takeover Offer
The Reject Shop board of directors have unanimously urged their shareholders to reject Allensford’s “opportunistic” takeover bid of $78 million, calling it “inadequate” and “low-ball”.
The struggling retailer received a takeover bid of $78 million from Allensford Unit Trust, owned by the Geminder family’s Kin Group.
The board of directors ascertain that “Allensford’s offer undervalues your shares” calling the offer “opportunistic”, “low-ball”, and “inadequate” insisting that shareholders “do nothing – take no action”.
Chairman of the board Willian Stevens, states that the offer does not reflect the value of the Reject Shop, stating that Allensford themselves know the value of The Reject Shop or they wouldn’t be offering anything.
“It is curious that the bidder has focussed so extensively on the downside risks of a Company they say you should sell off, but they want to acquire.”
Insisting that The Reject Shop’s own market history demonstrates their ability to bounce back from challenges and impacted earnings.
Stevens claims the offer is timed to exploit the company’s recent share price decline during a challenging retail period and does not reflect their long-term value.
“This offer by Allensford is an attempt to acquire the Company on the cheap.”
Stevens warns that an impulsive decision to accept will foil the board’s plans for earnings growth, reminding shareholders that two new board directors — with a combined retail experience of 70 years — will be joining the board this week.
The board states that by selling shares now, shareholders will be deprived of any upside in the future of The Reject Shop who have a large franking credit balance of $53.4 million ($1.85 a share) could have potential value for shareholders “if the Board determines future capital management initiative and re-gearing are appropriate.”
Stevens states that The Reject Shop remains committed to executing its customer-driven strategy and insists that the directors will keep its shareholders informed on all material developments in relation to Allensford’s offer.
“Our message to shareholders is clear — don’t give Allensford an early Christmas present.”