STRUGGLING British baby products retailer Mothercare today rebuffed two takeover approaches from an American rival at it continued to focus on its turnaround plan.
Philadelphia-based Destination Maternity confirmed it had also not abandoned its takeover quest, despite confirming that Mothercare had spurned a boosted offer proposal of 300p a share that valued the retailer at £266 million.
Ed Krell, chief executive of Destination Maternity, the world’s biggest retailer of maternity wear with more than 1,900 sites, said: “We are seeking to engage with the board of Mothercare on a constructive basis, with the goal of completing a recommended transaction.”
However, Alan Parker, chairman of Mothercare, whose UK business is mired in losses, said: “The board has given these proposals full and thorough consideration. We do not believe they reflect the inherent value of Mothercare to our shareholders or its prospects for recovery and growth. In addition, we have significant concerns about the deliverability of these proposals.”
Analysts at broker Liberium put out a note saying: “While the offer price should be attractive to shareholders, an initial look at Destination does not suggest to us that it would be an easy deal for Destination to digest. This could draw out other potential bidders.”
Mothercare, which has 220 UK shops under the Mothercare and Early Learning Centre brands and 1,221 overseas outlets in 59 countries, has been closing stores and developing its internet offer as part of a long-running effort to turn around its fortunes.
Its UK arm fell £21.5m into the red in its latest financial year after sales slid 7.5 per cent, while it is still to replace former chief executive Simon Calver, who resigned after a profits warning due to poor Christmas trading.
It has been hit by cut-price competition from supermarkets and online retailers in its main UK market, focusing more on its profitable. The resilient performance of the international division allowed the group to post a 61 per cent rise in underlying annual profits to £9.5m last May.
Destination Maternity wants to introduce its brands such as A Pea In The Pod and Motherhood Maternity to Mothercare’s UK and international outlets. Its proposals involve combining the companies under a new UK holding company, which would be listed in the United States.
Krell said a tie-up would give a global platform to expand both Destination’s maternity wear business and Mothercare’s baby and children’s operation.
Before today’s announcement Mothercare’s shares had fallen more than 40 per cent this year. The stock today closed up 19.5p at 252p.