The Bull

Monday 18

February, 2019 5:08 AM

'Opportunistic' $78m bid for Reject Shop

'Opportunistic' $78m bid for Reject Shop

Troubled discount retailer The Reject Shop has received a $78 million takeover bid after it had slashed its profit guidance by 40 per cent in October.

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By AAP 21.11.2018 02:09 PM

Shares in troubled discount retailer The Reject Shop have jumped more than 14 per cent following a $78 million takeover bid that the company has deemed "opportunistic".

The Reject Shop says it will consider Wednesday's offer from Allensford, the bidding vehicle of Raphael Geminder's Kin Group, but has urged its shareholders not to sell before it digests the news and makes a recommendation.

Reject Shop shares rose 14.4 per cent to $2.78 at 1400 AEDT following the news.

Allensford had earlier told the ASX it had appointed its broker Bell Potter to purchase Reject Shop shares through to January 7 at $2.70 per share - a 19 per cent premium to the one-month volume weighted average price of $2.27.

The takeover bid comes during a difficult time for The Reject Shop, which cut its profit guidance by about 40 per cent in October from $17.7 million to between $11 and $10 million.

"Although the board consider the offer to be somewhat opportunistic, it will evaluate the offer and Allensford bidder's statement received, and provide shareholders with a recommendation in due course," the Reject Shop said in a statement.

The Reject Shop has seen comparable sales fall or remain flat for four of the past five financial years, with shares down 83 per cent from a five-year high of $14.77 in August 2016.

But chairman William Stevens said the company's long-term growth prospects are good.

"The Reject Shop Board continues to believe in the long term growth prospects of our business which has remained profitable amidst the backdrop of a challenging period in the Australian retail environment," Mr Stevens said in a release.

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