What's next for Briscoe Group and its managing director Rod Duke?
The firm's takeover bid for Kathmandu was the most lively acquisition play the NZX has seen for some time. But it was unsuccessful, fizzing out last week after attracting a measly 2.3 per cent of acceptances.
The offer, which amounted to $1.80 per Kathmandu share through a combination of cash and Briscoe shares, wasn't enough to convince most of the outdoor apparel and equipment retailer's investors that the deal was a goer.
An independent assessment by Grant Samuel put a $2.10 to $2.41 valuation on Kathmandu shares, which closed at $1.46 yesterday.
Briscoe remains Kathmandu's biggest shareholder, with a 19.9 per cent stake.
But Duke is keeping his cards close to his chest over whether the company will hold on to its shareholding.
"Whether we're there long-term or short-term we've really got to decide that," he told Stock Takes this week. "There'll be a meeting of the directors coming up in the next week or two, and we'll have a bit of a think about what we want to do next."
Kathmandu's board and management may well be keen to see the back of Briscoe.
But Duke - who owns around 80 per cent of the Briscoes and Rebel Sport operator - isn't ruling out having another go at taking over the outdoor retailer.
"We're still keen," he says. "I could go back with a different offer at a later date."
In the meantime, Duke says Briscoe remains on the lookout for other acquisition opportunities on both sides of the Tasman.
"We don't stop assessing and looking and that won't cease."
Had Briscoe's Kathmandu takeover been successful, it would have created an Australasian retailer with annual sales of more than $900 million and an $847 million market capitalisation.
Cash burn
Briscoe's cash pile is looking a little sad after the Kathmandu bid.
The company's reserves were down to $16.7 million by July 26 from almost $90 million at the end of January, according to Briscoe's half-year report.
The drop mostly reflects the $68.7 million Briscoe spent on buying its Kathmandu stake.
Duke says depleted cash reserves won't stop the firm making another takeover attempt should the opportunity arise.
"Remember I've got no borrowings," he says, suggesting there's plenty of room for Briscoe to take on debt for an acquisition bid. "I'm probably the only retailer in town that's got cash on the books - everyone else has got debt."
Briscoe posted an 11 per cent jump in half-year net profit to $20.5 million last week. Sales rose 5.4 per cent to $244 million.
Briscoe shares closed unchanged yesterday at $2.85.
On the move
It's been a big year for staff changes at sharebrokers First NZ Capital.
In June, it emerged that investment banking managing directors Martin Stearne and Carl Blanchard were leaving the firm. They are being replaced by Brent Pattison, formerly of Forsyth Barr, and Justin Drake, who was previously with Credit Suisse in London.
This week, the company said compliance officer Richard Bodman was stepping down. He'll be replaced by Debbie Bourne, who joined First NZ from JBWere New Zealand in February.
Meanwhile, the firm told clients yesterday that institutional equities director David Fear was expanding his role to take "ultimate responsibility" for the firm's wealth business.
"David will still maintain his senior corporate relationship role, but to help cover we are thrilled to announce Alana Barron [formerly of Deutsche Bank] is joining the team."
Other recent appointments include Mike McIntyre, who left Fonterra to become First NZ's head of derivatives, and Dwane Clark, another former Deutsche Bank staffer who has taken over hedge fund sales at the sharebroker.
Spot the bargain
The Warehouse Group shares lost ground this week after the country's biggest listed retailer posted its full-year result last Friday.
The company, which had an improved second-half performance, reported a 5.9 per cent drop in adjusted profit to $57.1 million. That was above the firm's guidance range of $52 million to $56 million.
The stock made gains on the day of the result, closing up 2c at $2.62, before falling during this week to close at $2.52 last night. Warehouse shares have dropped more than 13 per cent over the past 12 months.
But Morningstar is suggesting that investors might be taking too dim a view of the retailer.
The independent research provider said a major improvement in the firm's core Red Sheds division was the "key positive" of last week's result.
"The stock is undervalued in our eyes, and we attribute this to the market's frustration with the firm's string of disappointing performances," Morningstar says in a note.
It has an "accumulate" recommendation on Warehouse shares.