Best & Less takeover offer accepted

Billionaire retail veteran Brett Blundy and (now online) music retailer Sanity owner Ray Itaoui made a $1.89-per-share, cash offer for Best & Less in May. Prior to this, Brett Blundy already controlled a 16.45 percent stake in Best & Less as a non-executive director of the business. Private equity firm Allegro Funds controls 32.43 percent, with the firm supporting the takeover along with Best & Less executive chairman Jason Murray’s Bignor Family Pty Limited which controls 8.27 percent of the retailer.

The support by the major stakeholders now meets the minimum acceptance condition of 55 percent – inclusive of Blundy’s stake as the BB Family International Trust (BBRC).

“We received a non-binding proposal from a major shareholder to increase its holding in BLG. While the offer does not contain a ‘typical control premium’, we have received statements from both Allegro and Bignor that they each intend to accept the offer in the absence of superior proposal,” wrote lead independent director Stephen Heath in a statement by Best & Less at the time.

The company showed early support, stating that “the minimum acceptance condition also provides a real opportunity for all remaining shareholders who wish to remain invested in the Company to do so in an entity that, should control pass under the Takeover Offer, is ultimately controlled by Brett Blundy, an individual with a strong track record of delivering value in the retail sector”.

Just weeks ago, Deloitte labelled the takeover as not fair due to the deal underselling the shares’ market value. In a report requested by Best & Less, Deloitte wrote that the $1.89 per share deal is below Deloitte’s estimated market value of between $2.03 and $2.43.

“Accordingly, it is our opinion that the Proposed Takeover is not fair,” Deloitte wrote.

However, they deemed the offer as reasonable as Best & Less would benefit from Blundy’s wealth of experience and it unlikely to receive a similar offer.“Parties associated with the Bidder, namely Mr Brett Blundy and Mr Ray Itaoui, have considerable experience in the retail sector and the Bidder (BBRC) has indicated that it intends to support the Company’s current strategy and will work with Management and Directors to identify growth opportunities.”

Ray Itaoui has assumed responsibilities of CEO, appointed by the board as a director of the company and Executive Chair. He will hold the position until Erica Berchtold takes over as CEO in September this year. The directors associated with Bignor and Allegro have resigned from their positions, with Jason Murray resigning from his position as Executive Chair.

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