Briscoe to defend takeover costs case

Briscoe Group [NZX: BGR] has confirmed it will defend legal proceedings against it from Kathmandu Holdings [NZX: KMD], which stem from its failed takeover bid for the outdoor clothing firm last year.

Kathmandu wants Briscoe – its largest shareholder – to pay about $3.2 million to cover expenses Kathmandu claims to have incurred in relation to Briscoe’s takeover offer.

It wants Briscoe to cough up $2.7 million of expenses incurred in New Zealand and $A446,000 incurred in Australia because the company is dual-listed.

Under Rule 49 of the New Zealand Takeover Code the target company is entitled to recover from the offeror any expenses properly incurred during an offer or a takeover notice.

Chief financial officer Reuben Casey says Kathmandu intends to claim back the amount it spent on legal fees, tax fees, advisers, printing and delivery costs which arose due to the failed takeover bid.

Briscoe has already paid Kathmandu $637,711 but says the balance of Kathmandu’s claim did not meet the criteria for reimbursement set out in the Takeovers Code.

It claims the disputed amount consists of fees charged by investment advisors Goldman Sachs and consulting firm Bain & Company, who helped Kathmandu defend the bid.

Briscoe chairwoman Dame Rosanne Meo says in a statement the fees were “unreasonable in both nature and quantum,” and Kathmandu has not established it was for work necessary to ensure its shareholders were properly informed about Briscoe’s offer.

There’s a fair amount of uncertainty over what are "properly incurred" expenses. Most arguments over this never make it to court and the parties end up settling behind closed doors.

David Goddard QC will lead Briscoe’s defence, supported by David Cooper, a senior partner at Bell Gully.

A court date for the hearing has not been set.

Briscoe made the bid for Kathmandu last July, amounting to $1.80 a share in cash and scrip, which lapsed without success in September after Kathmandu’s board warned shareholders it was opportunistic.

Kathmandu’s share price is at $1.65 while Briscoe’s is at $3.25.

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