Brierley's tilt at cashed-up Kirkcaldie lapses

Kirkcaldie's board of directors repeatedly advised shareholders not to accept Mercantile's offer.

Veteran corporate raider Sir Ron Brierley's bid for Kirkcaldie & Stains [NZX: KRK] has lapsed after he failed to attract enough acceptances from shareholders of the cashed-up retailer.

Kirkcaldie's board of directors repeatedly advised shareholders not to accept Mercantile's offer, which was initially $2.75 per share but was increased to $3 per share in April.

Mercantile is the third-largest shareholder in Kirkcaldie, which operated the upscale Wellington department store now being redeveloped as the first New Zealand branch of Australian retailer David Jones.

Sir Ron was looking to secure the residual assets of Kirkcaldie. Its ultimate value depends on the cost of exiting remaining property leases.

"Mercantile NZ gives notice that it has not received sufficient acceptances under the offer to satisfy the minimum acceptance condition of the offer and thus, the offer has lapsed in accordance with its terms and conditions and all acceptance forms will be destroyed," the company says.

The minimum acceptance condition in the initial offer document relied on Mercantile getting 90% of voting rights in Kirkcaldie by the closing date unless it accepted a lower level of 50%.

According to a substantial security holder notice filed to the NZX, Mercantile now holds 9.9% of Kirkcaldie, down from 11% on April 1.

Two weeks ago, the board lifted its estimate for the cash that will be returned to shareholders when the company is wound up to a range of $3.50-3.60 a share, from a previous range of $2.99-3.49, having exited the lease on its Petone premises and sub-leased its Thorndon Quay site.

"In light of these revised numbers we continue to recommend that you do not sell your shares to Mercantile for $3," Kirkcaldie says. "The board is confident of the company being able to distribute to shareholders between $3.50-3.60 per share in a winding up during the course of 2017. We would look to do so as quickly as possible and have a clear strategy for doing so."

Kirkcaldie stock was trading at $1.559 before Sir Ron first flagged his takeover offer at $2.75 apiece in February. The shares last traded at $3.26.


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