Shares of Kathmandu Holdings Ltd (ASX: KMD) are set to soar this morning after the embattled outdoor retail group confirmed it has received a takeover offer from its fellow New Zealand-based retailer, Briscoe Group.
In an announcement to the New Zealand Securities Exchange, Briscoe Group said that it had increased its stake from 4.99% to 19.9% having acquired NZ-listed shares from institutional investors at a price of NZ$1.80 per share (29% above the stock's closing price on the NSX yesterday). It also confirmed that it intends to lodge a takeover notice imminently in an offer comprising both cash and scrip (shares).
The news, which comes just one day after Xavier Simonet commenced his role as Kathmandu's new CEO, will come as a huge relief for shareholders who have watched their shares fall 58% over the last 12 months, and 68% since December 2014 on the back of ineffective promotional campaigns and poor consumer confidence.
Indeed, for its latest half-year earnings (for the six months ended January 2015) the company flagged a 7% increase in sales (on the back of 0.6% same store sales growth), while its earnings before interest and tax (EBIT) tumbled a massive 97% to just NZ$0.6 million.
Despite the company's recent weakness however, Briscoe's Managing Director and majority shareholder Rod Duke recognises enormous potential that could arise by combining the two businesses. He said: "I am excited by the potential that would arise from bringing together these two iconic retailers – we each have strong and recognisable brands that I see as complementary."
No further comments were made about the offer and Kathmandu said that it had had no contact with Briscoes as yet. But that is unlikely to deter investors from flocking to the stock this morning, despite another broad selloff in the market as investors continue to fret about the likely exit of Greece from the Eurozone.
