Damn, I was so close to buying this the other day. Congrats all.
Printable View
Damn, I was so close to buying this the other day. Congrats all.
Still undervalued IMO and has a lot of price recovery to go, especially with Briscoes on board.
Charts will never tell you these things. I bought on on the basis of the half year 'loss' being extremely overplayed IMO and the stock being well undervalued.... & it still is I think.
Regarding the notice, what does the offer of cash & scrip to all holders mean exactly?
Lets not forget Mr Xavier Simonet! He's starting work today :)
"The group said it intended to lodge a takeover bid for the remaining 80.1 per cent of Kathmandu immediately."
What does a "takeover bid" mean exactly? As a holder will I be presented with an offer of some sort?
More than happy to sell my shares to Mr Duke for $2.80.
Notice says shares and scrip... so cash and shares in the new group. As for price/quantity of this offer, will have to wait and see.
Surprised people are selling for under $1.80, given the immediate lodge for a take over and 20% purchase @ $1.80 - surely the offer will be at a higher price than that.
They bought of instos at $1.80 didn't they? My guess is there would be a ratchet clause in there if they increase the offer price above that so I would expect the offer to be at $1.80 - at least initially.
If you want to 'hold on' to your shares, why not accept the share offer and have a shareholding in a 'potentially' much better company.
Will be interesting to see what happens.
No contact with the Kathmandu board so I'd assume this is not a friendly approach and the KMD board are very unlikely to recommend acceptance of anything sub $2 a share. I'm surprised at all the sellers also. Imagine the Instos that sold overnight to BGR at $1.80 will have a clause that they get topped up if the final price is say $2.10 a share etc although they have been paid 100% cash and the offer is a cash and scrip offer so possibly not.
Surprised people are selling for under $1.80, given the immediate lodge for a take over and 20% purchase @ $1.80 - surely the offer will be at a higher price than that.[/QUOTE]
I'm not surprised that people are selling for under $1.80. Fact is the offer will be several months away from settlement and will clearly involve part scrip.
The board of KMD will have to commission an independent valuation which will take quite some time and KMD's prospects are very difficult to gauge given their woeful recent profit performance and hopeless stock turn.
KMD board can claim anything they like that the company is worth more but is it really ? Recent SP weakness suggests otherwise.
The board only have themselves and management to blame for the inept way this company has been run. I'd be running for the hills with my $1.75 cash and count myself extremely fortunate to have sold a pup for a good price and be shopping for a real bargain later this week if I had shares in KMD. Nearly everything on the NZX is currently on sale but KMD shares are currently selling for a very fulsome price IMHO.
Fair points Roger but I'd happily bet you a steak lunch this takeover does not succeed at $1.80. KMD is in play now and this bid is quite opportunistic. No contact made with KMD board so its hostile. The question is what do the large insto holders think is fair value and my guess is $2-2.20 range.
But the whole thing could take the rest of the year to play out and like you say you can take $1.75 and buy some other beaten down stocks at the moment...
Sorry Roger I won't be selling, I can be very patient:cool:
I got rid of KMD and WHS a couple of months ago while the price was still up and still think it was a good call, even factoring in the Brisco's takeover bid retail IMHO is not something I want to have in the portfolio at the moment, theres too many economic indicators signaling less than robust times ahead for even strong contenders let alone KMD. Its a risk like a lot and I take them but not in this case.
I disagree Roger - this stock is worth well over $1.80.
Remember this floated at around $2.20 if my memory serves me correctly. Since then, numerous stores have been opened and significant expansion into new markets. IMO - the market has significantly overplayed one poor half year result. Now having Briscoes on board... 1.80 is a give away.
Im with Couta - happy to hold and to see what Mr Duke offers me.
Possibly a noob question, but is KMD trading on the ASX suspended?
Reckon will have to be north of $1.80 probably $2.20ish I reckon.
Very well played by Mr Duke, acquiring at a 30% premium to market shows how they perceive this stock to be well undervalued. Excellent strategic move.
I hope it's north of $2.20, plenty of value to be gained even at that price. Emphasis on 'hope' tho.
Will be interesting to see which instos sold. With NZSuper holding a huge amount, they could put him over 50% pretty much by themselves.
I wonder what the ratio of cash to scrip would be?
Glad I purchased some a week ago
Guarantee there will be a real positive announcement shortly after offer is made.
Will be along lines of a fantastic early start to winter, the sales have gone exceptionally well and we expect full year earnings to be about $25m to $30m
(I did the sums after h1 and got $10m to $15m but that was before the fantastic start to winter)
If $25m for fy16 that's 12.5 cents/share
PE of 15 gives $1.80
He a clever guy that Rod
I don't think he offer $2.20 hunter, you never know
He''ll keep it at 1.80 but offer his higher priced shares in exchange. Not sure how he would go about it, maybe for every 10 KMD you have, he would pay out 6 at $1.80 and fork over 3 briscoes shares?
In theory BGR should be offering slightly more than what they have offered instiutional investors, as large holdings are less liquid and therefore harder to sell out of positions. However, I would expect there to be some politics at play going forward and thus a higher price will only be achieved through share offerings.
One thing to keep in mind is allot of the current share price valuations will not take into account of the recent price increase. Target prices are likely to have taken the amount the share price needs to increase in allot of valuations 'around town'.
Really keen to hear some sort of response/update/comment from KMD
Alrighty guys, we have a bit of action going on.
https://www.nzx.com/companies/BGR/announcements/266472Quote:
BGR Lodges Takeover Notice for all of the shares in KMD
2:53pm, 1 Jul 2015 | TAKEOVER
Briscoe Group Lodges Takeover Notice for all of the shares in Kathmandu Holdings Limited
1 July 2015: Briscoe Group Limited (Briscoe Group) announced today a takeover offer to acquire all of the ordinary shares it does not already own in Kathmandu Holdings Limited (Kathmandu). As disclosed yesterday, Briscoe Group currently holds relevant interests in 19.9% of Kathmandu Shares.
The Offer is for 5 Briscoe Group shares for each 9 Kathmandu shares plus a cash amount of NZ$0.20 per Kathmandu Share (the “Offer”). Based on the Briscoe Group one month VWAP of NZ$2.88 on 29 June 2015, this equates to an Offer price of NZ$1.80 (approximately A$1.58) per Kathmandu share.
An attractive Offer
An Offer equating to NZ$1.80 per share represents:
• a 34% premium to the one month VWAP for Kathmandu up to and including 29 June 2015; and
• a FY15 P/E multiple of 15.5x and a FY15 EV/EBIT multiple of 11.0x based on broker consensus estimates of Kathmandu’s FY15 earnings .
Briscoe Group Managing Director and majority shareholder Rod Duke said the proposed Offer represents a substantial premium and an attractive valuation multiple for the shares of Kathmandu.
“The Offer is an opportunity for Kathmandu shareholders to receive a premium for their shares in Kathmandu and to share in the benefits that would arise from being a shareholder in a larger and more diversified retail group.”
The acquisition of Kathmandu would create an Australasian retailing group that generates annual sales of over NZ$900 million and a group with wide product diversity and earnings potential that would be beneficial to shareholders, employees and customers.
Rod Duke said, “We see this as a great opportunity for both companies and their respective shareholders. Our intention is to bring the best practices from each organisation and leverage the scale of the combined group to grow earnings for the benefit of all shareholders. A larger company would also have a superior sharemarket presence, and should see more trading liquidity.
“Importantly, the combined group would have a broader and more diverse product offering that would be able to naturally compensate for seasonal trading patterns.”
Briscoe Group Chairman Dame Rosanne Meo said, “Briscoe Group has a long track record of success in retailing. In the last five years Briscoe Group has delivered strong returns to shareholders, growing earnings in every year. The key to its success has been the management team led by Rod Duke. They have established Briscoe Group as a leading retailer with 80 stores across New Zealand within the homeware and sporting goods retailing sectors, and a market value of approximately NZ$600 million.
“We are confident a combined Kathmandu and Briscoe Group would benefit from Rod and his management team’s retailing expertise and strong track record.”
Briscoe Group has delivered a total shareholder return of 234 percent since November 2009, which compares to 81 percent for the broader New Zealand market and Kathmandu’s negative 19 percent over the same period (since it listed on the NZSX and ASX).
Impact on Briscoe Group
Briscoe Group is seeking to acquire the 80.1 percent of the ordinary share capital of Kathmandu it does not own through the issue of 89.7 million Briscoe Group shares and payment of NZ$32.3 million in cash. This would reduce major shareholder Rod Duke’s interest in the combined group to 55.1%. The purchase of Briscoe Group’s existing 19.9% of Kathmandu’s shares was funded by a combination of available cash and a new bank facility. Measured at January 2015, the proforma net debt for the Combined Group is NZ$96.8 million , compared to Briscoe Group’s net cash balance at that time of NZ$89.7 million. On a proforma basis to January 2015, the Offer is accretive to Briscoe Group’s earnings per share. If the acquisition is completed Briscoe Group intends to apply for a listing on the ASX .
As expected - not sure why some of you were expecting an offer over $1.80. Mostly in shares so you still benefit from growth going forward.
My guess is the instos (that haven't sold yet) will back it so it will get over the line. Per 2014 accounts, 41 holders owned 92%
Not enough Mr Duke
Make it 7/9 25c p/s and we might have a cup of tea together
He's a smooth operator but can't expect to have it accepted prior to FY results
but then maybe he can?
$440m (including existing debt) odd seems an awful lot to pay for Kathmandu. Hope Rod hasn't lost his marbles.
Pretty hefty EV:EBIT multiple ....think you guys are lucky. Well done anyway
Keep an eye on that BGR share price.
And don't forget the earnings upgrade to come sometime soon from KMD
Lose Monet H1 and make $30m in H2 is some effort
That'll make the company worth 3 bucks plus
not much... i would thought most instos are holding above $2...
So based on the current SP of BGR it would comes to $1.78 for every KMD share. Please correct me if it is incorrect.
Not all roses for briscoes though, was it. From what i can make out on the basic charts, they listed at about 1.50, in 2002 and it took 13 years to make 100% . Was nearer .50c down from near 2.70 ish in 2009, but has been below or near 200MA RECENTLY. Oh to have bought in 2009 :ohmy:
Will this give some impetus for an up turn?
If Briscoes shares rise what does that mean for us? A basic question, sorry
BGR down 10c today thought holders might have viewed the deal better, early days yet, another bidder may emerge.
I vote reverse takeover! Or at least buy 19.9% of Briscoes then make them offer more for a takeover haha!
Will Aussies want shares in Briscoes, a tiddly little nz discount retailer?
Instos will get the big picture but retail unvestors?
Rod said most of the shares he got were from Aussie instos, the clever ones who took the opportunity to quit this dog at a good price -ang getting cash
Give Rod his due to taking the opportunity to try and get Kathmandu for what many perceive to be a cheap price.
That's what happens when you stuff things up, have too much stock, borrow too much money and slash your margins like Kathmandu have done - you open yourself up to predators who think they can do it better and come and buy you out.
Jury out whether Kathmandu can sort out the problems themselves, maybe or maybe not. Can Rod and his team, he obviously thinks so and needs a bit of headroom (risk) to do it.
KMD shareholders should count themselves very, very fortunate to be in the position they are...could have been much worse if Rod hadn't come along and turnaround targets weren't met....could easily have gone under $1.00 IMO.
Economy is hardly performing like a rock star is it !! (See latest dairy auction result overnight). Don't like BRG shares ?, take the money (low $1.70's), and buy something else.
You want to blame someone for your losses if you paid over $1.80 ?, blame management and directors.
I don't mind Briscoes shares its just I won't be getting enough of them under the proposed offer to get near breaking even on my KMD entry of $2.80 so will see what eventuates.
"At this stage Kathmandu is not in a position to comment further. The Board of Kathmandu will meet shortly to consider the takeover notice and draft offer in detail.
Until the Board of Kathmandu has given further guidance, shareholders are strongly advised to take no action in relation to Briscoe’s notice of intention to make a takeover offer.
Kathmandu is being advised by Goldman Sachs."
Well worth waiting to hear KMD's comments before taking on the offer. Will be intersting to hear what they have to say - a market update on current years earnings would be very helpful.
That update will come when it best suits them and when GS say so.
Been boom times in KMD methinks, stocks down and margins restored so H2 will save the year and it looks like $30m
If the first half had been nprmal the full year would have been $50m .....so take that and suck your eggs you Briscoe guys
I'm not totally convinced of this offer.
Lets say we do get our 5 BGR shares for every 9 KMD shares, then there would be some share dilution involved?
I also hope the BGR share issue takes place after us KMD holders get our full year dividend. If not, then the next BGR dividend better make up for it.
personally, 7/9 and 25cps for the next 40% is affordable for Mr Duke and he'd end up with 55-60% of both BGR and KMD. TBH, he also has to prove himself in the australian market where kmd is. kmd will be getting an independent valuation which on current data was $1.90 (morningstar). if 2h numbers are better then anything up to $2.50 is possible hence my numbers
There is a two week Notice and Pause requirement before you get the actual offer
here's a reference guide on T/O's, for anyone who is interested in understanding what happens
http://www.takeovers.govt.nz/assets/...5-hardcopy.pdf
Yeah 25cps cash sounds more reasonable. In case we miss the KMD full year dividend, it'll make up for it, assuming the dividend is at least 5cps, but as history shows, it would probably be 7c.
Rod Duke is just doing what he has to. Starting his bid low at $1.80.
I would be surprised if the KMD board accepted this. Let them bargain it out.
This is good....we need a good takeover scrap to entertain those of us on the side-lines :D
We should have kmd management recommend early next week.
Just as well there is such things as 'Chinese walls'
Goldman been buying heaps of KMD lately / Goldman advising Kathmandu
And didn't Goldman do well at the IPO? Part owners they were with Were and Quadrant. Got more than KMD worth today they did.
Roger, those Quadrant guys pretty clever and know when to time exits eh.
The current offer results in KMD share holders taking the majority of the risk as to whether BGR is able to turn things around and continue their success in their current business. 20c cash is very low in my view. However, with BGR already paying around $1.8 (slightly lower if you count original build of 5%) they have used now the majority of their cash in their balance sheet. Although they don't have any debt they do have a whopping $106m in operating leases - will be interesting to see their willingness to issue debt to support the takeover.
I suspect the first offer is a low ball offer giving them room to move up. How much cash they are willing to offer will be of question. I think 40c is much more of an acceptable offer when taking into account the proportion of shares vs cash.
I would have though the opposite. More than 50% of the risk is being passed to BGR and KMD holders benefit from the diversification of retail brands than BGR has.
Also, shareholders in KMD can either put their faith in a brand new CEO or in Duke who, while new to KMD, has significant experience in NZ retail.
All quite on the western front.
Share price drifting down and quite a way off the 180. Probably following the BGR price down.
Market suggesting the takeover a non-event?
Or plenty of action soon.to get things going again.
Price could also be supressed due to some big players selling their stake e.g. National Bank of Australia.
I'm expecting a psotivie reaction when KMD board makes their comments.
Those Quadrant boys are very clever...never get on the other side of a trade with them, you're the very short priced favourite to lose.
I think the drift down in the SP is recognition of a number of factors.
1. Market risk - Grexit
2. BGR shareholders underwhelmed and not convinced shareholders will be able to extract synergies very quickly and in sufficient quantity to make the offer worthwhile...e.g. while over time as N.Z. leases expire its quite plausible that Rebel sport could incorporate the KMD stores within their store footprint AKA a store within a store, there's far more KMD stores in Australia so how do they extract synergies there ?
3. KMD shareholders not impressed with the new proposed group structure and very low cash component, don't want a top heavy scrip offer and also not convinced regarding synergy execution
4. Downwards market bias
5. Take the money and run...so many other cheap shares out there
6. Unlikely to be a more compelling bid or full cash bid in this difficult market
All of the above.
One can only speculate, but I think the sell off is more of a reflection that the BGR offer is to low. Therefore, investors with a short-term focus are not wanting to hold.
If you look at the cost of creating a company similar to Kathmandu and also its Earnings Power Value (EPV) with a concervative WACC of 15%, while also taking out any potential for growth, I still get a price at around $2.
The reaction is the deal won't go through because the takeover offer is too low. Given they are being offered $1.72 given BGR share price today, the $1.60 is a big sign of sentiment that the deal won't go through and that everyone thinks the share price will head south when it blows over, thats what I get from the market sentiment anyway. It seems BGR shareholders aren't happy about the takeover in general cause that share price is heading way down.
Yes, it appears that Mr(s) Market needs to seek some counciling as he/she is likely to be diagnosed with schizophrenia. Selling something for less because it is worth more than offered is not something that someone with a stable mind would do.
I think your logic has gone a bit back to front & then front to back here Mr Blizzard - the take over is too low so the share price will head down if it fails? Hmmm. If it doesnt go through - it must be perceived to be worth more.
Think there are alot more factors playing on the current SP.
Before the takeover the share price was drowning at the $1.30 end, what lifted it up was the takeover offer, if people perceived it to be worth more then it would not have gotten to that level in pricing in the first place. I'd say theres a split some think its worth more, some less. I'll leave it at that. Of course theres many factors doing a bit of suppressing from profit takers to the situation with Greece, but I'm not hopeful that things are better if the takeover is rejected.
I sold out today to back ATM (I was gonna wait since I have done a bit of it already but thats just me being emotional), since I happen to have shares in 2 takeovers. I weighed up everything and considered I'd gain more benefit being with ATM and plus I'm not hopeful a deal will be done. I think KMD have really good long term value, but what I mean is short term wise I'm not hopeful its reflected in the share price the true value. Given I have many options to gain value its a matter of weighing up the ones that I find more beneficial overall. Its how I'm thinking anyway.
I understand.
I have ATM and BGR and KMD shares, I only recently purchased KMD though. I intended to hold them longterm(or till I thought I should bail out as the sky fell in a worst case scenario) but I really like Rod Duke, and how he has transformed BGR and would like to see what he does with KMD, so im stuck wondering if I should take the offer and find out or hold out for a better offer that will never come leaving me to hope that the new CEO steps up and turns KMD around. This bitterly cold winter must be helping KMD though
Fair enough then, I think Rod Duke is a good businessman; hes really done well with BGR and if the KMD takeover does go through then it will be wonderful opportunity for BGR expanding over to AUS, but thats a if it goes through. I see so many good senergies happening that I might consider dipping in later on in the future. Yes this winter will definitely have helped KMD so profitability will likely be better than what people expect. As I was explaining to a friend yesterday how to make a hard decision. Its usually best to weigh up your opportunity cost and then going with the decision that you feel will benefit you the most. You should always decide if your a short term or long term investor and go with that. Never regret the decisions you make, only learn and move forward.
Pennyacw, always interested in others who use the EPV concept
Getting $2 with WACC of 15% though implies you have a pretty high 'normalised earnings' figure
I assume that also implies things that need fixing at Kathmandu are capable of getting fixed to the extent that 'normal' going forward is achievable?
At least the way the offer is structured if you believe the offer is too light you get to share in the upside if you keep your BGR shares
This infectious spreading across Aussie should help Kathmandu
http://www.smh.com.au/comment/cut-fa...10-gi8ct6.html
Global domination beckons
http://www.stuff.co.nz/business/indu...xavier-simonet
An things all fixed ... as soon as the offer documents come through watch for that earnings upgrade .... maybe $35m this year
Go Rod
Decent of you to stop short of saying 'broken'
http://www.smh.com.au/business/retai...0150717-gicx2c
Hes not taking BGR to Australia BGR are trying to buy KMD that have a number of Australian stores - I think there is a difference.
Kathmandu board sure are taking their sweet time in getting back to shareholders. It's been 3 weeks since the takeover was announced and we're still yet to hear the board's guidance, besides "take no action".
Anyway, some recent news about Rod Duke. He reckons Kathmandu will release a trading update by August 1st.
http://www.theaustralian.com.au/busi...-1227446402760
http://www.theage.com.au/business/br...0150720-gig4vw
They told you to take no action.
KMD waiting for the formal offer to come before saying much more. Need independent reports to justify their indignation at such a low offer.
Rod not 'expecting' an update - he pressuring them to make one (helps him maybe)
Of course there will be really good news from KMD. Goldman will tell them when to tell the world.
Maybe tomorrow, maybe not but be patient.
Jay, you surely not going to be guided by what your Board says are you?
LOL, I'm just impatient. This is the first time I've been involved in a takeover, so pretty excited by it.
4yrs ago, I sold out of Charlies a few weeks before they got taken over by Asahi, so I was pretty gutted to miss out!
I just want to see any form of action by Rod or the Kathmandu board.
As for being guided by the board, not like we have much choice?
After the actual offer documents are sent out, we can accept the offer and sell our shares to Briscoes. Or sell our KMD shares on the market. Or do nothing - and miss out on everything.
Hmmm, leads me to think, what happens if you sit back and do absolutely nothing? What happens to your KMD shares?