Retailer Briscoe Group has tabled its formal offer document to Kathmandu shareholders this afternoon as part of its takeover bid for the outdoor clothing and equipment retailer, however it is understood Kathmandu's Australian shareholders are not happy.
Briscoe Group which owns Briscoes, Rebel Sport and Living and Giving, announced its takeover bid on June 30 after it bought up 19.9 per cent of the company.
The Group is offering five Briscoe shares for every nine Kathmandu shares as well as 20c per Kathmandu share with the offer date closing on September 17.
It is understood Australian shareholders think the offer is opportunistic and too low, with too much scrip. The shareholders are also concerned Briscoe Group has no plan, but Briscoe chair Rosanne Meo said shareholders would benefit more from the combined Group than they had with the retailer alone.
"We strongly believe the Offer before you represents a compelling opportunity to realise value for your investment in Kathmandu as well as share in the future opportunity created by combining the two companies," Meo said.
The offer document highlighted Briscoe Group's lack of debt and cash reserves as well as its share trading in comparison with Kathmandu.
Since November 2009, Kathmandu's shareholder return has decreased by 19 per cent with Briscoe Group shareholder return rising by 234 per cent overall.
NZX50's Gross Index rose by 81 per cent over the same period.
Briscoe Group managing director and majority shareholder Rod Duke said:
"By offering a combination of shares and cash, we are providing Kathmandu shareholders with the opportunity to share in the benefits we expect will be generated from combining the two retail businesses and forming a significantly larger Trans-Tasman retail group."
The document also highlighted sales volatility as a push for Kathmandu shareholders to accept the offer, with complementary peak sale periods for the two businesses - Briscoe Group's leading up to Christmas and Kathmandu's in Easter and into winter.
"Both businesses therefore complement each other. Combining them would result in lower volatility in operating earnings," it said.
Briscoe Group said the combined group would have annual sales in excess of $900 million based on historical trading and a market capitalisation of some $900 million.
If the offer was successful, Briscoe Group said it intended to seek a listing on the ASX alongside its NZX listing. Kathmandu has said it would update the market at the appropriate time but within two weeks.
Briscoe Group shares opened at $2.80 this morning with Kathmandu shares opening at $1.75.