Briscoe unveils five-for-9 cash and scrip offer for Kathmandu

Briscoe Group [NZX: BGR], the retailer controlled by managing director Rod Duke, is offering Kathmandu Holdings [NZX: KMD] shareholders a mixture of cash and scrip which equates to a 5 cent premium on the outdoor equipment retailer's last share price.

Auckland-based Briscoe is offering Kathmandu shareholders five Briscoe shares for every nine Kathmandu share as well as 20 cents, in a bid to buy the remaining 80.1 percent of the stock it doesn't already own, in offer documents lodged with the NZX. The offer consideration equates to $1.80 per share, a small premium to the $1.75 at which Kathmandu shares last traded, but well below the $4 peak the stock traded at in May last year. Briscoe shares last traded at $2.80.

Duke owns about 80 percent of Briscoe and the offer would see his ownership watered down to 55 percent. Under his leadership the retailer's shares have climbed 130 percent in the past five years as he drove sales growth at his homeware and sports goods stores. Kathmandu stock has slipped about 15 percent in the same period and has dropped 45 percent in the past 12 months. In February, Kathmandu said Christmas and January trading had lagged behind expectations, driving the retailer to a first-half loss. A month earlier, the company appointed Xavier Simonet to replace Peter Halkett, who left in November after eight years running the company.

If the takeover is successful the combined annual sales based on historical trading would be in excess of $900 million Briscoe said, without offering further guidance.

"We haven't provided financial forecasts in the offer document for the combined group because there isn't enough information available about Kathmandu's current trading for us to forecast their outlook with any confidence,'' Duke said. "The recent cool weather would presumably have been pretty favourable for them. Last year the Kathmandu directors made a preliminary announcement on 1 August so we're expecting they will probably do the same this year."

The deal would see Duke enter the Australian market, where Kathmandu currently earns most of its income.

"By offering a combination of shares and cash, we are providing Kathmandu shareholders with the opportunity to share in the benefits we expect will be generated from combining the two retail businesses and forming a significantly larger trans-Tasman retail group," Duke said.

Briscoe announced at the start of the month it had built up a 19.99 percent stake in Kathmandu, notifying the market it intended to launch a full takeover.

(BusinessDesk)