Wakefield-headquartered women’s value retailer Bonmarche (BON) is being targeted in a surprise takeover bid from Spectre.

No, this is not the megalomaniac group from the James Bond movies, this is the Dubai registered entity controlled by Philip Day, the formidable retail entrepreneur and owner of The Edinburgh Woollen Mill.

Retail tycoon and turnaround specialist Day plans to take Bonmarche private at a lowly offer price of 11.445p - a fraction of the 200p at which shares were priced in 2013’s AIM IPO - hence this morning’s 23.6% share price slump to 13.75p. In an interesting twist, the take-private deal will see Day reunite the flagging Bonmarche brand with one-time parent Peacocks.

READ MORE ABOUT BONMARCHE HERE

The rather sinister-sounding Spectre has hoovered up more than 26.2m shares in struggling Bonmarche from major shareholder BM Holdings at 11.445p. Day’s vehicle now holds sway over 52.4% of the shares as a result, triggering a mandatory offer under City takeover rules.

The offer price values Bonmarche, a specialist purveyor of affordable clothing to mature women in a range of sizes, at a mere £5.7m. That’s significantly south of the £8m of taxable profits churned out in the financial year to March 2018, although Bonmarche’s fortunes have deteriorated since putting up that number.

BONMARCHE - THE BACKSTORY

Founded in 1982, Bonmarche was sold to Peacocks in 2002 and was on a growth tear before Peacocks lurched into administration in 2012. Bonmarche was dragged down with it, then subsequently bought by Sun Capital US from Peacocks’ administrators, turned round under new management and floated on AIM in late 2013.

The high street retailer subsequently moved to the Main Market in 2015, but has proved a poor investment with the share price sinking on a slew of damaging profit warnings.

In its latest earnings alert (19 Mar), Bonmarche guided towards an estimated underlying pre-tax loss of between £5m and £6m for the year ending 31 March 2019. That was significantly worse than the breakeven-to-£4m loss range set out a few months earlier.

SPECTRE’S PLAN

Businessman Philip Day is best known as the owner of The Edinburgh Woollen Mill, yet he has also acquired the Peacocks, Proquip, Austin Reed, Country Casuals, Jaeger and Jacque Vert brands in the UK. In today’s statement, Day sets out his turnaround plan for Bonmarche, but rather surprisingly reveals it has only had access to publicly available information on its target.

‘Spectre has not made an approach to, or had any discussions with, Bonmarche management in relation to this offer’, the statement reads. Nevertheless, here’s Spectre’s take on the rationale for making an offer:

‘Against the backdrop of the significant decline in Bonmarche’s profitability, Spectre believes it is well positioned to provide advice, guidance and support to secure the long term future of the Bonmarche business, its stores and employees. The owner of Spectre, Philip Day, has a successful track record within the retail sector, especially in turnaround and distressed situations.’

THE EXPERT’S VIEW

Russ Mould, investment director at AJ Bell, comments: ‘Move over Mike Ashley, there’s another king in town.

‘Struggling womenswear specialist Bonmarche could be the next retailer to leave the stock market after receiving a takeover bid from Edinburgh Woollen Mill owner Philip Day.

‘Day is looking to grab a bargain from the high street and has offered considerably less money for Bonmarche than its market value last night, having already built up a controlling stake.

‘Day wants to help save Bonmarche which has suffered multiple profit warnings in recent years.

‘Taking the business private and out of the City spotlight would theoretically help the retailer to focus on a recovery plan and not have its every move scrutinised by investors.

‘However, shareholders aren’t getting a good deal from the takeover so they would lose out should Day be successful in revitalising the business.

‘Day’s career includes buying Peacocks, Austin Reed and Jacques Vert. His approach is very similar to fellow retail mogul Mike Ashley in that he likes to acquire troubled groups out of administration, or while they are on the knees when trading as a public company.'

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Issue Date: 02 Apr 2019