Fantastic backs takeover offer from Freedom’s Steinhoff

A “fragile relationship” with investors helped coax Fantastic’s board into accepting Steinhoff’s $361m takeover offer.

Fantastic Furniture’s popular Retro range.

A “fragile relationship” with sceptical investors and a constant struggle to explain its results to the market helped foster an environment ripe for global furniture giant Steinhoff to make a $361 million takeover bid for Fantastic Holdings, the lead independent director for Fantastic said today.

Fantastic (FAN) director John Hughes, a former chief executive of agricultural services company Ruralco, said the board of the furniture group, whose brands include Fantastic Furniture, Plush and Dare Gallery, were unanimous in the belief the $3.50 per share offer from Steinhoff was a “bird in the hand’’ it could not refuse.

“We have had what some would refer to as a fragile relationship with the market etc, and it takes a considerable period of time and effort — not just to deliver the (financial) results — but to get the market positive on a consistent style of basis,’’ Mr Hughes told The Australian.

“Then you have to stand back, particularly as a non-executive independent director, and say well there is the bird in the hand here, with a very full and fair offer, or do we reject that and say ‘no’, we think we can do better over the next couple of years.

“And, on balance, we, every one of us, said we should go to the shareholders with this as a recommendation because it is giving everybody certainty, there are a lot of shareholders who have been very loyal to the company for some period of time, it gives them that good return.’’

A scheme implementation deed proposes Steinhoff secure control of Fantastic at $3.50 a share, a robust 43 per cent premium to the target’s last traded price of $2.45.

The all-cash deal has been unanimously recommended by the board of Fantastic and will see the target’s Fantastic Furniture, Plush and Dare Gallery brands combined with Steinhoff’s Freedom furniture chain and its retailer Snooze, provided it is waved through by shareholders and regulators.

The buyer’s parent, Steinhoff International, also owns prominent clothing and manchester retail outlets Harris Scarfe and Best & Less after it paid $6.7 billion for South Africa’s Pepkor in 2014.

Already the prospect of clearing an investor vote appears assured as leading Fantastic shareholders Julian Tertini and Peter Brennan — with a combined 50.8 per cent of the company — have pledged to lend their support.

“This is a compelling proposal and provides Fantastic Holdings shareholders with the opportunity to realise a significant premium, reflecting the underlying strength of our brands, operations and people,” chairman Mr Tertini said.

“Steinhoff Asia Pacific’s management team shares our vision for the growth and expansion of Fantastic Holdings and, as such, we believe they are the right long-term partner for our customers, employees, suppliers and other stakeholders.”

Fantastic Furniture CEO Debra Singh.

Tim Schaafsma, a director of Steinhoff Asia Pacific, said the takeover of Fantastic presented an opportunity to fast-track its expansion in the region.

“Fantastic Holdings is a complementary business in terms of market segments, customer base and vertical integration,” he said.

“The addition of Fantastic Holdings, its brands and manufacturing operations will broaden our brand portfolio and accelerate the growth of Steinhoff Asia Pacific in Australasia.”

A shareholder vote on the deal is slated for December 7.

Fantastic was counselled on the deal by Monash Private Capital and Watson Mangioni, while the suitor tapped Investec and Minter Ellison as advisers.