Bonmarche U-turns on Philip Day takeover after poor trading
The group’s board recommended shareholders accept the 11.4p-a-share offer tabled in April.
Shares in troubled womenswear retailer Bonmarche have plunged after it said it is backing a cut-price £5.7 million bid by billionaire Philip Day following further trading woes.
Shares in the chain plummeted 29% at one stage after it U-turned on its previous rejection, saying it recommends shareholders accept the 11.4p-a-share offer tabled in April after “poor” first quarter trading.
It had previously claimed the offer “materially undervalues” the group, but the change of stance came as it said wet weather had compounded tough conditions in the clothing market.
The increase in uncertainty that has developed reflecting the trading and financial position of the business during the first quarter of the financial year makes the certainty represented by the offer potentially more attractive in the short term Bonmarche
Bonmarche cautioned that while it is possible that full-year profits may hit forecasts, there is a “significant degree of uncertainty attached to this”.
It also revealed its auditor may include a reference to the “uncertainty with regard to going concern” in full-year accounts due to the trading troubles and without any sign of improvement in revenues.
Bonmarche said: “Whilst the board’s view remains that the offer does not adequately reflect the potential longer-term value of the business, the increase in uncertainty that has developed reflecting the trading and financial position of the business during the first quarter of the financial year makes the certainty represented by the offer potentially more attractive in the short term.”
It said the offer is “fair and reasonable” and Mr Day would be a “successful long-term owner”, although he has not yet agreed to the board’s request to discuss his future plans for Bonmarche.
Russ Mould, investment director at AJ Bell, said: “Shareholders will be hugely disappointed by the retailer having to be bailed out at a cheap price, but it is perhaps better to get something back than nothing at all, which is the alternative if Bonmarche can’t be saved.”
Mr Day – who is behind the Edinburgh Woollen Mill Group and owns a number of other retailers such as Peacocks, Jane Norman and Austin Read – acquired more than half of the company’s shares in April through holding company Spectre, triggering a mandatory takeover bid.
Spectre said at the time that it would undertake a profitability assessment on Bonmarche’s estate of more than 300 stores and close under-performing sites or reduce costs by cutting the number of staff or seeking a lower rent.
The bid came after Bonmarche issued its third profit warning in six months in March.
Mr Day’s name has been linked with several retail turnarounds.
Last year he was one of the potential buyers circling House of Fraser, which was eventually sold to Sports Direct owner Mike Ashley.
His other investments include Proquip, Country Casuals, Jaeger and Jacques Vert.