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Brierley's tilt at cashed-up Kirkcaldie lapses after shareholders reject offer

Monday 13th June 2016

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Veteran corporate raider Ron Brierley's bid for Kirkcaldie & Stains 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. Brierley was looking to secure the residual assets of Kirkcaldie, whose 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 said in an NZX statement. 

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

According to a substantial security holder notice filed to the NZX this morning, Mercantile now holds 9.9 percent of Kirkcaldie, down from 11 percent 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 to $3.60 a share, from a previous range of $2.99 to $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 said. "The board is confident of the company being able to distribute to shareholders between $3.50 and $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 Brierley first flagged his takeover offer at $2.75 apiece on Feb. 26. The shares last traded at $3.26.

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