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Bonmarche pulls U-turn on takeover offer from retail tycoon Philip Day

The company blamed weak trading in the first quarter on a tough clothing market and unseasonable weather conditions.

Bonmarche
Shares in Bonmarche plunged 27% in morning trading

Bonmarche Holdings PLC (LON:BON) has pulled a U-turn on its decision to reject a £5.7mln takeover offer from Philip Day’s Spectre Holdings Ltd after poor trading.

The womenswear retailer said it now recommends shareholders accept the 1.445p-per-share cash bid from Spectre.

Spectre, the holding company for Day’s retail empire, approached Bonmarche with the offer in April.

READ: Bonmarche rebuffs £5.7mln takeover offer from retail tycoon Philip Day

Bonmarche had told shareholders to take no action on the approach as it believed it undervalued the business.

The offer represented a 34% discount to Bonmarche's £8.7mln market value the day before the offer was made. The group's market capitilsation has since fallen to £5.6mln.

Day, who owns the Edinburgh Woollen Mill, had said he would keep the offer open until further notice.

Offer now considered 'fair and reasonable'

In a statement on Wednesday, 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.

“As a result, the board of Bonmarché, which has been so advised by Investec as to the financial terms of the offer, is now of the view that the terms of the offer are fair and reasonable.”

The company blamed weak trading in the first quarter on a tough clothing market and unseasonable weather conditions.

The group said it was now uncertain whether it would meet its pre-tax profit forecast for the year.

Following £6mln in cost costs, the company said it has “adequate liquidity” provided its bank continues to support it by way of its £5mln overdraft and other facilities.

Bonmarche says medium and long term prospects still good

The retailer added: “The board believes that once the near term has been weathered, the medium and long term prospects for the Bonmarché business are good."

It said: “The board continues to welcome the opportunity to engage with Mr Day, who has, as yet, not taken up the offer to discuss future plans for the business, and believes that, with his sector experience, he would be a successful long term owner.” 

In morning trading, Bonmarche shares fell 27% to 11.3p each.

Quick facts: Bonmarché Holdings plc

Price: 8.5 GBX

LSE:BON
Market: LSE
Market Cap: £4.25 m
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