Fraser Group’s efforts to take full control of MySale have been dealt a blow after the firm urged investors to reject a £14million offer on the grounds that it was too low.
The Australia-based fashion marketplace said that Fraser’s 2p per share offer undervalued the company and its prospects, noting that it is the minimum price the Sports Direct owner could have offered under City rules.
MySale also announced that non-executive chair Carl Jackson has stepped down with immediate effect as ‘a result of conflicts arising’ from him being both a director and a substantial shareholder.
Jackson, who owns an 11 per cent stake in MySale, backs the Fraser’s bid.
Flash sale site MySale said Fraser’s offer undervalued the company and its prospects
Fraser, Mike Ashley’s retail giant behind House of Fraser, Flannels and Evans Cycles, snapped up a 29 per cent stake in the fashion marketplace in June.
The move made it MySale’s largest shareholder – ahead of Sir Philip Green who owns 16 per cent through his wife’s offshore vehicle Shelton Capital Management.
Then in August Fraser made a 2p per share offer to gain control of the rest of the firm it does not already own, valuing MySale at around £13.6million.
MySale noted that Fraser’s offer was at a discount of approximately 26 per cent to its closing price of 2.69p on 16 August, the day before the retail giant announced its takeover bid.
In the 12 months to 16 August, MySale’s average closing price was 4.26p per share, the company said.
Directors also reiterated they were not approached about the offer and did not have any ‘substantive’ discussions with Fraser beforehand.
They said this left them unable to quantify the potential benefits that a deal could have in terms of ‘access to additional brands and volumes of products being sold through the MySale platform’ as well as any impact on revenues and profit margins.
‘Directors are of the view that a price of 2p per MySale Share does not reflect an adequate value or premium for control of MySale and therefore undervalues MySale and its prospects,’ the company told investors today.
‘Accordingly, the MySale Directors […] do not consider the terms of the Offer to be fair and reasonable and therefore recommend that MySale shareholders do not accept the offer’.
MySale shares were untraded at 1.9p on Friday. Fraser Group shares fell 2 per cent to 786p.
MySale is a flash sale site that connects global buyers and sellers to Australian and New Zealand e-commerce sites.
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