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.

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