Just Group remains under siege from Premier Investments and Solomon Lew as it tries to follow the leads of IAG and Origin in rejecting unwanted bids from aggressive rivals or stalkers.
There is a difference in size: the Premier bid is now worth some $816 million, compared to $898 million when first pitched at Just on March 31.
But the tactics are the same: brand the bid ‘opportunistic’ and then try to argue that the reason why the company is in a spot of ‘trouble’ is due to what is going on outside its operations.
IAG did that with QBE and although Origin initially said yes to BG Group of Britain, the $2.6 billion Santos-Petronas deal enabled it to change its mind and say no.
Now Just is trying to argue with some justification, that its share price is down because the economy is weakening, especially retailing.
That was supported by the April retail trade figures from the Australian Bureau of Statistics yesterday which showed a 0.2% drop in the month, the third negative growth month since the start of the year.
Interestingly the figures did show positive growth in clothing (and department stores), the sector in which Just operates. The ABS reported that Clothing and soft good retailing sales were up an estimated 2.9%, reversing a fall in March.
So Just’s target statement, issued yesterday, labelled the Premier bid as ‘opportunistic’ and too low and undervaluing the company.
All standard stuff in a takeover.
Just said a report from Lonergan Edwards valued Just Group at $4.78 to $5.28 a share, compared with Premier’s offer of $3.97 to $4.23. Premier’s offer of $2.20 cash and 0.25 shares for each Just Group share, valued the company at $898 million when first made on March 31.
"Premier’s opportunistic offer materially undervalues the company. It does not adequately recognize the value of Just Group’s strongly performing business, our leading market positions in the fast fashion retail sector and our excellent growth prospects,’’ Just said.
Just shares closed unchanged yesterday at $3.90 and have fallen 16% so far this year.
In a statement the special committee of the Just board looking after the takeover defence said it unanimously recommends that shareholders reject Premier’s opportunistic and unsolicited takeover offer.
"Just Group’s Target’s Statement sets out the key reasons for this recommendation.
"The Independent Expert’s Report from Lonergan Edwards, contained in Just Group’s Target’s Statement, values Just Group at between $4.78 and $5.28 per share. Lonergan Edwards has indicated that Premier’s offer is “neither fair nor reasonable”. Its assessment of the value of Premier’s offer consideration of between $3.97 and $4.23 per share is significantly lower than its assessed control value of Just Group shares, which has a mid-point of $5.03 per share."
Just chairman, Dr Ian Pollard, said: “Premier’s opportunistic offer materially undervalues the company. It does not adequately recognise the value of Just Group’s strongly performing business, our leading market positions in the fast fashion retail sector and our excellent growth prospects.
"Just Group has an exceptional management team, with outstanding experience and skills in retailing that have delivered seven years of continuous sales and profit growth and excellent financial returns. Looking forward, Just Group continues to be well positioned for strong future growth,” said Dr Pollard
"A directors’ forecast for the year to 26 July 2008 has been included in Just Group’s Target’s Statement. Pro forma earnings per share (“EPS”) are expected to be 33.4 cents, an increase of 14 per cent over the adjusted 2007 financial year."
Dr Pollard highlighted Just Group’s growth potential, saying “Recent trading across the Just Group portfolio supports our 2008 pro forma forecast. We have also undertaken a review of Just Group’s strategic plan. As a result, we have increased our 2010 profit goal from at least 38.4 cents EPS to at least 40 cents EPS.
“If achieved, this will represent double digit EPS growth on average for the remaining two years of our strategic plan.
"The Premier offer is structured to suit Premier’s objectives, not the interests of Just Group shareholders.
"Each member of Just Group‘s Special Board Committee who holds Just Group shares intends to reject Premier’s materially inadequate offer and we urge all Just Group shareholders to do the same,” Dr Pollard "said.
Even if Just succeeds in repelling Mr Lew this time, he doesn’t fold his tent and go away. In Colorado where Affinity Partners of Hong Kong bid, he took a blocking minority stake and then said no till a new higher offer was announced to remove him, and he is hanging in as a noisy minority holder in Country Road.
