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Mothercare rejects £266m takeover
Baby products retailer Mothercare has rejected takeover approaches worth as much as £266 million from a leading North American retail chain.
Destination Maternity, which is the world's largest designer and retailer of maternity wear with more 1,900 retail sites, has so far failed to persuade the board of Mothercare to engage in talks over its interest.
It disclosed today that it has tabled two approaches to the struggling UK chain, with its latest cash and shares proposal on June 1 valuing Mothercare at 300p a share, equivalent to £266 million.
Mothercare, which has 220 UK shops under the Mothercare and Early Learning Centre brands, has been closing stores and developing its internet offer as part of a long-running effort to turn around its fortunes.
It recently recorded UK losses of £21.5 million after annual sales fell by 7.5%. And t he company is without a permanent chief executive after Simon Calver resigned in the wake of a profits warning due to poor Christmas trading.
Destination Maternity said it wants to introduce its brands such as 'A Pea In The Pod' and 'Motherhood Maternity' to Mothercare's UK stores and international franchise stores.
Its proposals involve combining the two companies under a new UK holding company, which would be listed in the United States.
Chief executive Ed Krell said a tie-up would provide a global platform to expand both Destination Maternity's maternity wear business and Mothercare's baby and children's business.
He added: "We have long been familiar with Mothercare and hold the company's UK heritage and successful track record of international expansion in the very highest regard.
Destination Maternity has 1,906 retail locations, including 578 stores mainly under the names Motherhood Maternity, A Pea in the Pod and Destination Maternity. There are also 1,328 leased department store locations and it sells on the web through Destination Maternity.com.
The Philadelphia business was founded in 1982 as Mothers Work, a mail order business, and now generates more than 500 million US dollars (£291.1 million) in annual sales.
Mothercare opened its first store in 1961 in Surrey.
Its franchised-based international arm is now seen as the growth engine of the business and with 1,221 stores in 59 countries accounts for more than 60% of worldwide space and sales. In May, the division's resilient performance helped the group post a 61% rise in underlying profits to £9.5 million.