Major Bonmarché shareholder "disgusted" by shock U-turn
today Jun 27, 2019
Value fashion retailer Bonmarché may have felt that it had no choice but to recommend Philip Day/Spectre Holdings’ buyout offer this week as its trading has continued to decline, but one of its major shareholders seems to have been taken by surprise and said it’s “disgusted” at the move.
Cavendish Asset Management is Bonmarché’s third-largest investor with a holding of just under 11%.
Its fund manager Paul Mumford told the Daily Mail: “We’re disgusted Bonmarché has simply capitulated without consulting majority shareholders or even putting up a semblance of a fight. It seems management was looking at the short-term picture rather than long-term prospects.”
And there’s no denying that it was short-term issues that prompted the board’s U-turn.
Edinburgh Woollen Mill owner Day already holds more than half of the company and made a full buyout offer in mid-May that valued the retailer at less than £6 million. The Bonmarché board had said this “materially undervalued” the firm and its prospects and urged shareholders to sit tight, which almost all of them did.
But on Wednesday (June 25), it said tough conditions meant it was now recommending acceptance. However, it added that it continues to think Day would be getting the firm too cheaply.
Despite management’s view that there’s hidden value in the firm, its share price plunged more than 25% on Wednesday to 11.4p after the U-turn as investors assumed the takeover was virtually a done deal.
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