(Alliance News) - Frasers Group PLC's bid to take full ownership of online retailer MySale Group PLC received a blow on Friday, after the AIM listing said a GBP14 million bid is too low.
At two pence per share, MySale said the bid was the lowest the Sports Direct owner could have offered, under City rules. Frasers in June acquired just shy of a 29% stake in MySale.
MySale also announced Friday that Non-Executive Chair Carl Jackson has stepped down immediately. Jackson is also a "substantial shareholder" in the company and supports the Frasers bid.
MySale operates e-commerce sites with a focus on the southern hemisphere, including nations such as Australia and New Zealand. Frasers owns retailers such as Sports Direct, House of Frasers and Evans Cycles.
Frasers in August tabled a bid to take full ownership of MySale. At 2p per share, it valued the MySale share capital Frasers does not already own at GBP13.6 million. It put a GBP19 million valuation on all of MySale's equity.
MySale shares were untraded at 2.20p per share on Friday morning in London. FTSE 100-listed Frasers was 1.9% lower at 786.00p.
MySale noted its shares closed at 2.69p each on August 16, the day before Frasers announced its takeover bid. In the 12 months to August 16, MySale's average closing price was 4.26p per share, the company said.
"The MySale directors are of the view that a price of 2 pence per MySale share does not reflect an adequate value or premium for control of MySale and therefore undervalues MySale and its prospects," the company said.
Over the past five years, takeover offers have needed to command a hefty premium to be successful, MySale found.
Looking at UK public takeovers, it said that the average bid premium has been 43% compared to the closing price ahead of an offer.
Frasers in August said part of its rationale for acquiring MySale was that it would be complementary to its existing offering. MySale on Friday, however, said no discussions on commercial collaborations have taken place.
MySale's current directors have recommended shareholders reject the Frasers offer. Jackson, who has now stepped down as chair, supports the bid, however. He left the position due to "conflicts arising in his role" as a director and substantial shareholder.
Jackson, MySale said, also deems the Frasers offer too small. However, it provides the "greatest certainty" of receiving 2p per share for his stake in the company. Jackson owns just under an 11% stake in MySale.
Senior Independent Director Charles Butler will now stick around for a bit longer, MySale said. He will leave by the end of the year or following its annual general meeting for 2022. No date for the AGM has been set yet.
It was initially planned for Butler to depart on September 24.
Frasers has built a reputation for dealmaking in recent years. Acquisitions have seen it take control of brands such as Jack Wills, Evans and more recently, Missguided - in a GBP20 million deal struck in June.
By Eric Cunha; ericcunha@alliancenews.com
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