LA Private

Less than fair offer looks to be the best theyll get

The keenly-priced $1.89 per share cash offer for Best and Less (ASX:BLG) by a group of insiders and big shareholders has been found to be not fair but reasonable in an independent expert’s report.

Deloittes said in the Target statement’s independent expert report on Monday that Brett Blundy and Ray Itaoui’s is “not fair” to other shareholders “but reasonable”.

Deloitte estimated the value of Best & Less shares was between $2.03 and $2.43, but said it recognised the practicalities of the unusual situation where the two retail veterans will likely end up controlling the company because major shareholders such as private equity group Allegro have already signalled they will sell into the $1.89 per share offer.

The bid is a done deal because of the low minimum acceptance condition of 55%.

The bidders led by Messrs Blundy and Itaoi, plus major shareholder, Allegro and other shareholders have already reached the 55% level.

While the bid is not fair but reasonable, Best and Less’s independent board committee says shareholders should still think seriously about their options.

“The Offer provides an opportunity for BLG Shareholders who wish to exit their shareholdings to do so with certainty. Further, it also allows larger BLG Shareholders, who wish to do so, to exit in full for their holdings which, in the absence of the Offer or a competing proposal, they may otherwise have to do at a discount to prevailing trading prices of BLG Shares.

“In the absence of a superior proposal and subject to the satisfaction or waiver of the other Conditions, the Minimum Acceptance Condition is likely to be fulfilled, and the Offer is likely to succeed, given the Bidder Group’s existing holding and the intentions of Allegro and Bignor, and control of the Company is likely to pass to the Bidder Group as a result of the Offer.

“As at the date of this Target’s Statement, the Offer is the only offer or proposal available to BLG Shareholders and the IBC is not aware of any other offer or proposal that might be an alternative to the Offer.

“The BLG IBC considers that there are merits in remaining a minority BLG Shareholder in the scenario where the Offer succeeds and the Bidder Group does not acquire a Relevant Interest in 90% or more of the BLG Shares.

“This includes being invested alongside entities associated with Brett Blundy and Ray Itaoui, who each have, a strong track record of value creation and who are supportive of the fundamental aspects of the current strategy, policies and existing management.”

The independent board committee told shareholders they can accept some or all of their shares into the offer, they can sell some or all of their shares on market or they cannot accept the offer and remain as minorities.

Interesting the three of the independent committee – Stephen Heath, Colleen Callander and Melinda Snowden are independent directors and says they will remain independent directors if the Offer is successful and the Company remains ASX-listed.

And two of those, Stephen Heath and Melinda Snowden, have each advised the Company that “he or she currently intends not to accept the Offer in respect of the BLG Shares that they individually hold or control.”

Two other independent committee directors – Fay Bou and Jason Murray – are “affiliated with major BLG Shareholders Allegro and Bignor. As noted above, both Allegro and Bignor have provided the Company statements that they intend to accept the Offer in the absence of a superior proposal.”

“As members of the Independent Board Committee, Fay Bou and Jason Murray make the same recommendations as the Continuing Independent Directors as outlined above.”

Best and Less shares edged up 0.27% to $1.87 on Monday.