The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
STOCKHOLM, Sweden — Investment firm Mellby Gard said on Monday it had offered to buy fashion retailer Kappahl for 20 crowns per share in cash, valuing the company at 1.54 billion crowns ($161.6 million).
Kappahl, which is struggling with weak markets and tough competition, saw its operating profit drop to 6 million crowns in the March-May quarter from 121 million a year ago, on roughly unchanged sales of 1.2 billion crowns.
Its shares have dropped by more than a fifth so far this year.
Mellby Gard, which currently has a 29.6 percent stake in Kappahl, said it would not raise the bid, which represents a premium of 43 percent to the closing price of 13.99 crowns for Kappahl shares on July 26.
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"Based on our experience and history with the company, we want to create opportunities to deal with the significant challenges that face both the retail- and the clothing market," Mellby Gard Chief Executive Johan Andersson said in a statement.
Mellby Gard added that synergies with its other businesses could strengthen Kappahl's competitiveness.
Kappahl said in a separate statement that it had appointed an independent bid committee, adding that chairman Anders Bülow and board member Thomas Gustafsson, who are both also board members of Mellby Gard, would not participate in the evaluation of the bid due to a conflict of interest.
Kappahl has 382 stores in Sweden, Norway, Finland, Poland and the UK, as well as an online shop. Sweden is the firm's largest single market.
By Helena Soderpalm; editor: Kirsten Donovan.
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