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KappAhl attracts bid from existing shareholder, shares surge

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today Jul 29, 2019
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KappAhl has received a takeover offer from investment company Mellby Gard, it said on Monday, with the offer of SEK20 per share in cash, valuing the firm at SEK1.54 billion (£131 million).


KappAhl


The potential purchaser already has a 29.6% stake in the company and said it has no intention of increasing its offer, which is perhaps no surprise given that it represents a premium of 43% to the closing price of SEK13.99 for Kappahl shares on Friday.

The share price surged to just below the offer price on Monday morning.

Like many other retailers targeting the womenswear and family fashion sectors in Europe, KappAhl has faced its challenges in recent periods, but Mellby Gard clearly sees some value in the company and expects to be able to turn it around.

Mellby Gard CEO Johan Andersson said in a statement: “Based on our experience and history with the company, we want to create opportunities to deal with the significant challenges that face both the retail and the clothing market.”

So what happens next? KappAhl’s board has appointed an independent bid committee with board member Pia Rudengren as its chair. But due to a conflict of interest, board members Anders Bülow and Thomas Gustafsson “have not participated, and will not participate, in the board's evaluation of or decision on the offer.”

"We take our task very seriously and intend to conduct our work with integrity, accuracy and in the best interest of all shareholders. We will shortly present which financial advisors we have chosen,” Rudengren said. 

The committee said it will evaluate the offer together with its advisors “and obtain a fairness opinion” with its decision on whether to recommend the bid coming “no later than two weeks before the expiry of the acceptance period for the offer.”

KappAhl, which was founded in 1953, is a major name in the Nordic region and also operates in Poland and the UK with 380 KappAhl and Newbie stores. It also sells online and its e-commerce sales have been rising fast, although they still only represent a relatively small percentage of total sales.

Last month the company reported a challenging Q3 and said that its womenswear offer hadn’t been attractive enough with its sales falling during the quarter. Like-for-like sales and the gross margin also dropped and still-new CEO Elisabeth Peregi has a major task on her hands in returning the business to full health.

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