Byline: Arthur Hagopian
SYDNEY, Australia — Directors of clothing retailer and wholesaler Palmer Corp. Ltd., best known for its JAG brand, will recommend that, in the absence of a higher offer, shareholders accept a takeover bid being made for the company by apparel and footwear retailer Colorado Group Ltd., Palmer executive chairman John O’Brien said.
Colorado said last week it intends to make an off-market cash takeover bid for the whole of the issued shares in Palmer Corp. Ltd, at a price of about 15 cents a share. If the bid is successful, Colorado will fund the payment by Palmer Corp. of an interim dividend of 53 cents a share to all shareholders, managing director Rowan Webb said.
Webb noted that the bid price constitutes a 76 percent premium to Palmer Corp.’s closing share price of 25 cents per share on Dec. 18.
Dollar figures are converted at current exchange.
He noted that Palmer Corp. had many synergies with Colorado’s business and would strengthen its brand portfolio.
“We have said for some time that we would pursue acquisition opportunities that would complement our core business while providing an appropriate level of growth and return,” he said.
Directors were confident Palmer Corp. is a good fit with Colorado, he said.
“The strength of the newly structured head office team at Palmer gives us great comfort that a seamless transition is possible. We have the management and retail expertise together with the financial strength to unlock the potential value of Palmer Corp.’s mid-to-upper market brands, particularly the JAG label,” he said.
“Long term, the acquisition is expected to deliver improved profitability and cost benefits. In the short term, we remain on track to achieve our full year offer document forecasts,” he added.
“We recognize that Colorado can leverage off its success with its existing brands and use its financial position to build on what we have achieved,” O’Brien said.
He revealed that his family company, Betrola Investments, which holds 48.9 percent of Palmer, has already agreed to accept Colorado’s offer for its 19.9 percent stake in Palmer Corp.
The offer is conditional on 90 percent acceptances being received.
Palmer Corp. owns 27 stores throughout Australia and has a substantial wholesaling and licensing business, while Colorado has more than 330 stores throughout Australia, trading under the divisions of Colorado Adventurewear, Mathers Shoes and Williams the Shoemen.