Not once but twice in the last six weeks, United Kingdom-based retail chain Mothercare plc rejected acquisition offers from its American competitor Destination Maternity, the retailers announced today.
The most recent offer Destination Maternity submitted July 1 was for 266 million British pounds ($453 million) in cash and stock in a new holding company to be based in the U.K., but with shares listed in the U.S. on the New York Stock Exchange or NASDAQ.
Mothercare’s board declined the proposal today, saying it “significantly undervalued” the company’s worth. This follows an earlier offer from Destination Maternity in late May, which was 9% to 20% lower, which it also rejected.
“We do not believe [these proposals] reflect the inherent value of Mothercare to our shareholders or its prospects for recovery and growth,” says Alan Parker, chairman of Mothercare. “Mothercare has a very strong and valuable international business and significant potential for sustained improvement in the UK.”
Destination Maternity, No. 318 in the Internet Retailer Top 500 Guide, says Mothercare refuses to negotiate, and that it continues to evaluate its options with regard to a possible combination of the two companies.
Destination Maternity says the combined companies, which would have annual revenue of $2.5 billion and 4,300 retail locations, including A Pea In The Pod and Motherhood Maternity stores in the U.S., would be the global leader in maternity, baby and young children’s apparel and products. Destination Maternity hoped it could leverage Mothercare’s direct and online expertise to enhance its multichannel shopping experience.
“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,” says Destination Maternity CEO Ed Krell. “This is consistent with Destination Maternity’s stated strategic objective to enhance our position as a global leader in maternity apparel, including through international expansion.”
Destination Maternity brought in an estimated $52.0 million in online sales in 2013, up 20.0% from $43.3 million in 2012. Mothercare, No. 126 in the Internet Retailer 2014 Europe 500, brought in $214.2 million (128.8 million British pounds) in e-commerce sales last year, down 23.1% from $278.5 million (179.6 million British pounds) in 2012.
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