Billionaire Brett Blundy’s Best & Less takeover bid deemed not fair but reasonable
The takeover offer for retailer Best & Loss pitched by billionaire Brett Blundy and bidding partner Ray Itaoui has been deemed not fair but reasonable by an independent expert.
The takeover offer for retailer Best & Loss pitched by billionaire Brett Blundy and bidding partner Ray Itaoui has been deemed not fair but reasonable by an independent expert, with shareholders not linked to the takeover suitor not receiving any control premium for their stock.
A report issued by Deloitte within a takeover booklet released on Monday said the $1.89-a-share takeover offer for the discount retailer was below the range of its valuation of the market value of Best & Less, with Deloitte assessing the value of Best & Less stock at between $2.03 and $2.43 a share.
This had forced Deloitte to conclude that the takeover bid was not fair.
“There are challenges with the assessment of the value of a cyclical business like Best & Less, especially in the current economic environment and, together with the high levels of debt (which comprises only lease liabilities), we consider it reasonable that the valuation range is wider than would normally be the case,” Deloitte added.
It then concluded that on balance, in its opinion, while non-associated shareholders were not receiving any control premium for their Best & Less shares, recognising the disadvantages and challenges associated with being a minority shareholder and an uncertain path to future liquidity, it considered that the proposed takeover to be reasonable.
Mr Blundy and Mr Itaoui already control 16.45 per cent of Best & Less, while two major shareholders – 32.43 per cent stakeholder and private equity firm, Allegro, and 8.27 per cent controller Bignor, which is associated with Best & Less chairman Jason Murray – have already agreed to accept the offer, which closes on June 22, in the absence of a superior bid.
The Deloitte report said that shareholders might choose to stick with the company, refuse to sell their shares into the takeover and await a better offer as minority shareholders.
It added that others with lower-risk profiles might sell out.
“For those non-associated shareholders who have a relatively low-risk appetite, they may prefer to accept the proposed takeover, receiving liquidity and price certainty,” the report said.
“For those … with a higher risk appetite, they could choose not to accept the proposed takeover and, subject to not being compulsorily acquired, wait to receive such future dividends as may be declared and potentially receive a better sale price for their Best & Less shares in the future.”
Shares in Best & Less ended Monday 0.3 per cent higher at $1.87 on a day when the S&P/ASX 200 fell 0.22 per cent.
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