Destination Maternity proposes merger with Mothercare

02 Jul '14

4 min read

Destination Maternity Corporation is making an announcement as required by the UK Takeover Code in light of the recent press speculation in respect of Mothercare plc ("Mothercare" or the "Company"). Destination Maternity confirms that it has submitted two non-binding written proposals to Mothercare about a possible combination of the two companies, which have both been rejected by the Board of Directors of Mothercare.

Destination Maternity believes its latest increased proposal, which was delivered on 1 June 2014, provides a strong basis for discussions between the parties but Mothercare has refused to engage with Destination Maternity on its proposals. Destination Maternity continues to evaluate its options with regard to a possible combination.

Destination Maternity's latest proposal is for a combination of the two companies under a new UK holding company, which would be listed in the U.S., whereby Mothercare shareholders would receive 300 pence for each Mothercare share, which today would comprise 230 pence in cash and shares in the new holding company valued at 70 pence, and which would value all the issued share capital of Mothercare at approximately £266 million ($453 million, note 1).

Destination Maternity also proposed a mix and match election under which Mothercare shareholders could elect to receive more shares or more cash in an offer, subject to equal and opposite elections by other shareholders.

Destination Maternity's proposal represents:

-a premium of approximately 29% to the closing price of Mothercare shares of 232.5 pence on 1 July 2014;

-a premium of approximately 90% to the closing price of Mothercare shares of 157.75 pence on 26 May 2014 (the last trading price before Destination Maternity's original proposal of 27 May 2014);

-a premium of approximately 64% to the closing price of Mothercare shares of 182.50 pence on 30 May 2014 (the last trading price before Destination Maternity's second proposal of 1 June 2014);

-a premium of approximately 86% to the volume-weighted average price of Mothercare shares for the one-month period prior to 26 May 2014 of 161.23 pence; and

-an increase of 9% – 20% to the original proposal made by Destination Maternity on 27 May 2014 under which Mothercare shareholders would have received between 250 – 275 pence for each Mothercare share.

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