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Brierley lifts takeover bid for Kirks

NZ NewswireNZ Newswire 25/04/2016 Sophie Boot

Veteran corporate raider Ron Brierley has increased his takeover offer for Kirkcaldie & Stains after his earlier offer was rejected by the former retailer's board.

Brierley lifted his offer to $3 a share from the $2.75 he offered in March and extended the closing date by a month to June 12, according to a statement to the NZX.

Brierley's Mercantile NZ is the third-largest shareholder in Kirkcaldie, which operated the iconic Wellington department store that is now closed for redevelopment as the first New Zealand branch of Australian retailer David Jones.

Brierley is looking to secure the residual assets of Kirkcaldie, whose ultimate value depends on the cost of exiting remaining property leases.

Brierley said the director's initial low scenario of $2.99 a share was "now very relevant as a result of the Petone lease deal falling over and Kirks being on the hook for a payout of nearly $1.5 million over the next seven years".

Kirkcaldie stock was trading at $1.559 before Brierley first flagged his takeover offer at $2.75 apiece on Feb. 26. The shares last traded at $3.13, more than the $2.20 price Brierley paid to increase his stake in late 2015. Mercantile currently owns 9.9 per cent of the company.

On April 1, Kirkaldie directors recommended shareholders reject Brierley's offer, which they said was too little.

The board calculated a high and low scenario for the company's wind up, with the high scenario paying $3.49 per share and the low scenario paying $2.99 per share, both higher than Mercantile's initial offer.

The company had entered into a conditional transaction for its Petone lease which would have brought that liability to an end when Brierley first made his offer, but that was unsuccessful. On April 18, after that transaction failed, the board reiterated its recommendation that shareholders not accept the offer, and said it was optimistic it could secure a transaction "which will substantially mitigate the company's exposure under the Petone lease."

It also said it had entered into a conditional deal for the Pantry lease with the landlord and prospective tenant currently in negotiations. If that transaction is successful the board's low scenario will increase to $3.08 per share, ahead of Brierley's new offer.

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