So will the board of retailer, Just Group, toss in the towel and accept the sweetened "final" offer from Solomon Lew’s Premier Investments?
Premier increased the cash component of its takeover offer for clothing retailer Just Group by 15c per share.
The company is now offering $2.245 in cash and 0.25 of a Premier share for each Just security if it reaches a 90% relevant interest in the clothes retailer.
That values Just Group at $4.0175 a share, or about $808.8 million.
Just shares traded at $2.91 before the announcement, and then jumped to $3.39 (up 48c) before easing a touch to finish at $3.38. Premier shares rose one cent to $7.10.
Premier said in its statement to the ASX that this was its final offer for Just and won’t extend its offer beyond August 6 if it does not have 50% of Just by that date.
In addition, Just shareholders who accept the offer in time to be on Premier’s register by September 29 will also be entitled to receive a fully-franked dividend of 18c per Premier share, or 4.5c per Just security. Shareholders who accept the offer by August 6 will be registered as Premier holders.
But don’t expect Just to fall over, yet. Just bagged the higher offer, but didn’t reject it outright.
"The core offer has not improved,.
Premier’s offer of more cash is conditional on it achieving 90% control and Just said the core offer had not improved and the amendments to the offer were highly conditional while there was no certainty the additional payment would be paid.
But it said it was evaluating the revised bid and urged shareholders to take no action for now.
The company said July trading has been pleasing and updated sales figures will be released after the company’s financial year end on July 26. But ‘pleasing’ isn’t good news. It could mean sales haven’t worsened, as they did in June.
Premier made its position clear earlier in the day: "It is time for all Just shareholders to accept this enhanced offer which provides them with a substantial cash component and a significant premium,” Premier chairman Mr Lew said in the statement.
"This offer is now the best possible opportunity for Just shareholders.”
Premier said the offer represented a premium of 43% to 58% over Just’s volume weighted average share price of $2.84 since the retailer’s downgrade on July 2, assuming Melbourne-based Premier gained 90% of the securities.
The offer is also equivalent to a price 16.4 times earnings.
Premier will waive all offer conditions if it reaches a 50% interest in Just.
"We have thought long and hard about making this enhanced offer, particularly in light of the recent performance of Just and the surprise profit downgrade issued by the Special Committee of the Just board,” Mr Lew said.
"However, we believe that Premier is best placed to help the Just management team achieve the potential of the Just Group.”
Premier has established an acceptance facility to wholesale clients who hold at least half a million Just shares so they can indicate that they would accept the offer if it becomes unconditional.
The takeover has gone nowhere since Just downgraded its earnings earlier this month, and still rejected the Premier offer.
Mr Lew said “It is time for all Just shareholders to accept this enhanced offer which provides them with a substantial cash component and a significant premium.
"With the potential of an extra 15 cents in cash on what is already a very generous offer as well as the potential to participate in Premier’s fully-franked final FY2008 dividend, this Offer is now the best possible opportunity for Just shareholders.
"Even with Premier’s Offer to support it, Just’s share price has been under constant pressure.”
“However, we believe that Premier is best placed to help the Just management team achieve the potential of the Just Group. In addition to cash, Just Shareholders will acquire Premier shares at an extremely attractive price.
"Just Shareholders will then be able to benefit from ongoing exposure to Just and any improvement in the performance of Just under Premier’s stewardship. Premier believes Just needs its decades of experience across the retail spectrum to be able to navigate the headwinds facing it.
"Premier has the ability to provide Just with substantial cash resources which it can use to fund future acquisitions.
"Premier Shareholders will also be able to benefit from any value which Premier unlocks in relation to its substantial franking surplus.”
