Solomon Lew’s Premier Investments says it could abandon its $809 million hostile takeover bid for Just Group a day after Just downgraded earnings and sales because of the slump in retailing.
"We are currently considering our position in relation to our bid,” Lew was quoted as saying in the statement to the ASX.
Using a "material adverse change” clause in its bid to scrap the takeover would allow Melbourne-based Premier to retire its offer and perhaps return with a lower bid.
Or it could abandon the offer all together; much in the way Spotless pulled out of its bid for Programmed Management Services when the latter’s pre-tax profit did not meet a conditional level in the Spotless bid.
Premier said it cannot believe that the Just board hasn’t now changed its mind and recommended the Premier offer.
Just Wednesday cut its month-old profit forecast by up to 13% because of the slump in retailing.
Ironically the downgrade came the same day as official figures showed retail sales rising a stronger than expected 0.7% in May.
Just blamed slowing sales from May onwards and poor returns from New Zealand where first half growth contacted, and may have done so again in the June 30 half.
Just told shareholders to knock back the Premier cash and share offer as being "neither fair nor reasonable”.
But in its statement yesterday Premier said it "has no confidence in anything that the Just board says about its future performance. A core skill of any good retailer is the ability to predict and respond to market conditions.”
Just rose 12c to $2.90 yesterday. Premier shares were unchanged at A$7.70. Just’s valuation is still well over $220 million short of the Premier offer.
Premier is offering 0.25 of its shares and A$2.095 in cash for each Just Group share, valuing the bid at A$4.02, based on yesterday’s closing prices.
The offer is due to close July 18.
