Reject Shop shares rocket on Canadian takeover bid
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More news: Shares in The Reject Shop have soared in early trading, more than doubling to $6.64 after the value retailer said it has agreed to a $259 million takeover by Canadian retail chain Dollarama.
The offer price of $6.68 per share represents a 112% premium to The Reject Shop's previous closing price of $3.15. The company's board has unanimously recommended that shareholders vote in favour of the scheme, with largest shareholder Kin Group, which holds a 20.8% stake, already supporting the acquisition.
Canada's Dollarama to acquire The Reject Shop for $259m
The news: Canadian retail chain Dollarama is set to acquire ASX small cap The Reject Shop via a scheme of arrangement, for an equity value of $259 million.
The numbers: The acquisition price of $6.68 per share represents a 112% premium to The Reject Shop's last closing price of $3.15.
The context: The Reject Shop's board has unanimously recommended that shareholders vote in favour of the scheme. The company's largest shareholder Kin Group, which holds a 20.8% stake, intends to support the acquisition.
The Reject Shop said that it plans to determine a special dividend of up to 77 cents per share, should the scheme become effective.
Toronto-listed Dollarama is headquartered in Montreal with 1,601 retail locations throughout Canada. It also owns a 60.1% interest in Dollarcity, a Latin American value retailer with 588 stores in Colombia, Guatemala, El Salvador and Peru.
What they said: "Today marks a milestone in the journey of The Reject Shop," said chairman Steven Fisher.
"Attracting an offer from Dollarama, a recognised leader in the value retail market, is testament to both the meaningful improvement that our incredible team has made to our business over the past few years as well as the significant growth potential that exists for The Reject Shop."
Dollarama CEO Neil Rossy said: "Identifying the right opportunity to expand into new geographies and build on our track record as a leading value retailer in Canada and Latin America has been a key objective for the Dollarama team.
"With this acquisition, we have a unique and compelling opportunity to bring our differentiated value proposition to a new market which presents a clear path for growth through an established platform."
The source: ASX
