Directors of The Reject Shop want shareholders to reject an “unsolicited and highly opportunistic, low-ball offer” from Allensford to acquire the discount department store.
Allensford is a bidding vehicle created by Raphael Geminder’s investment company, Kin Group.
The Reject Shop’s chairman William Stevens said the offer undervalues the company’s shares and fails to account for its future plans for growth.
“The Reject Shop is conservatively geared and has remained profitable despite the continuing challenging retail environment and its investments in structuring the business for growth,” Stevens said in a letter to shareholders.
“[We have] already implemented a number of initiatives in laying the foundations for future growth and [continue] to see this growth as achievable.”
The Allensford offer, made a month after The Reject Shop slashed its half yearly profit guidance by approximately 40 per cent, amounts to $2.70 per share, less than the retailer’s current trading price of $2.88 per share.
The Reject Shop now expects between $10 million and $11 million in profit in the first half of FY19, compared to $17.7 million in the previous corresponding period.
The business blamed the “extremely weak retail environment” for the 2.4 per cent sales drop over the first 15 weeks of the year.