Packaging tycoon Geminder family makes takeover bid for The Reject Shop
Melbourne's billionaire Geminder family has lobbed a $78 million takeover bid for The Reject Shop, warning the ASX-listed discount chain's profitability was at risk of collapse under current ownership.
The offer of $2.70 a share - a 19 per cent premium to the stock's one-month average price of $2.27 - disclosed to the ASX on Wednesday morning was lodged by the family investment vehicle of Raphael Geminder, who founded and owns 38 per cent of the $1.2 billion packaging giant Pact Group.
The Reject Shop's shares have fallen 54 per cent over the past year, from $5.26 to $2.43.
The unconditional offer follows the Reject Shop issuing a profit downgrade last month, when it revised down its forecast from about $18 million to between $10 million and $11 million for the first half.
Meanwhile the retailers' comparable sales growth has fallen or remained flat in four of the past five financial years.
"There is increased competition for consumer discretionary spend following the emergence of a number of online discount retailers and continued high levels of competition in bricks and mortar discount department stores," the bidder's statement said.
"Unless managed appropriately, these factors are of particular concern for retailers such as TRS which have a significant fixed cost base (due to the large leased store network and associated costs) meaning the impact of a slowdown in sales is amplified."
Accepting the cash offer would give Reject Shop shareholders immediate value while removing the risk of earnings decline, the statement said.
The Geminders' bid is being launched through its family investment vehicle the Kin Group, which has offices in Melbourne, Australia, and New York.
The Reject Shop has 351 stores across Australia, and last year had total sales of $800 million, reporting net profit of $16.6 million.
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