Mar 13, 2020
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Big Moss Bros shareholders split on takeover deal

Mar 13, 2020

With stock market volatility continuing, many listed companies are trading at cheap valuations at present and this could make takeovers of those that might be struggling more likely, given that they could be bought fairly cheaply.

Moss Bros

The roughly £22 million takeover of Moss Bros by Brigadier that was announced yesterday is an example of this, and while it has been agreed by the board, major shareholders are split over the deal.

The potential new owners say that Moss Bros in private hands would have more room to put improvements in place and cut its costs. And while some stores are expected to close, when balanced out with new openings, the closures will be a maximum of five and no jobs would be cut. The bidders also said that they would invest in the firm’s e-tail operations and with the costs involved in being a publicly listed company taken out of the equation, the company would see a further cash benefit.

Some shareholders seem to have been won over. Gatemore Capital Management, is the firm’s second-biggest shareholder on a 10.1% stake and welcomed the takeover.

“We are pleased with the proposed transaction to take Moss Bros private by Brigadier Acquisition Company, which represents an attractive premium,” said Liad Meider, a Gatemore. 

But Cavendish Asset Management has questioned the reasoning behind the deal. The investor has a 5% stake in the company but it’s unclear how much it paid for that.

Cavendish has a history of objecting to low-price takeovers having also been a shareholder of Bonmarché and being the most prominent of that retailer's shareholders to oppose its takeover by Spectre Holdings last year.

A Cavendish fund manager, Nick Burchett, has said the acquisition is unwise. “This is a well-timed if opportunistic bid by Brigadier, and the sharp fall in the market has certainly helped them pick this up cheaply,” Burchett said. “But with little relief for the high street from the Chancellor [in the budget] and the ongoing supply chain risk from the coronavirus, you have to wonder how wise this acquisition is at this time.”

Whether other shareholders will feel the same way is open to question. But given the share market plunge of recent days, many could be happy to exit their investment in Moss Bros at a higher price than if they'd sold this time last week. 

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