PGR board rejects takeover bid

Published at Oct 7, 2015, in Small Caps

The directors of PAS Group (ASX:PGR) have rejected a takeover offer from Australia Brands Investment, labeling it “opportunistic”, but said that it would test the waters with other parties about a takeover.

Last month it received a 63c per share all-cash takeover offer from ABI, acting for Coliseum Capital Management.

Discounting the shares ABI did not already hold, the deal was worth $69.5 million.

Accounting for the 19.23% of PAS shares held by ABI, the deal valued PAS at about $86 million – an amount PGR directors said undervalued the company.

“PAS is well managed and has achieved stable year on year sales growth, a high level of cash generation and growing returns. PAS Shares also offer an attractive dividend yield,” it told investors in its formal response to the bid.

“Your directors consider that you will be better off retaining your PAS Shares, rather than exiting your investment in PAS for $0.63 cash per Share by accepting ABI’s Offer.”

While it lauded the management expertise of Coliseum, it said it would enter talks with other parties about a potential takeover bid.

Since the bid was launched, PGR shares have traded above the offer price, but not going above the 65c mark making its current price 2c higher than the offer price.

PGR is a fashion retailer with a stable of fashion brands under its purview, including Metalicus, Marco Polo, and White Runway.

However, it also licenses brands such as Slazenger, Everlast, Dunlop, and Disney.

During the 2015 financial year, PGR delivered a net profit after tax of $8.8 million from underlying earnings before interest and tax of $20.2 million.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Thanks for subscribing!