Mr Duke, managing director and 75% Briscoes (BGR) shareholder, has offered the equivalent of $1.80 per Kathmandu (KMD) share, of 20c cash per share and an exchange of five BGR shares for every nine KMD shares held.
However, analysts are questioning the size of the 20c cash component per share, describing the timing of the offer as ''opportunistic'', given KMD's share price has been depressed.
KMD's board has contracted Goldman Sachs to advise on the bid, but has not commented this week on the takeover proposal, other than to say in a brief market note yesterday it was due to meet ''shortly'' and shareholders were ''strongly advised to take no action''.
Forsyth Barr broker Suzanne Kinnaird said Mr Duke's proposed $1.80 takeover offer was materially below her assessed value for KMD, and below Forsyth Barr's bid value range of $1.89 to $2.50, struck by using Australasian retail sector merger and acquisition multiples.
While full year 2015 valuation multiples for the proposed takeover offer appear attractive, this reflected suppressed earnings and was not reflective of the earnings potential of KMD, she said.
''We do not expect the proposed bid to be successful on the currently disclosed terms and do not expect KMD's board to support a takeover offer at these levels.
''We expect BGR will have to raise its proposed bid and possibly offer more cash to be successful,'' Ms Kinnaird said.
Craigs Investment Partners broker Peter McIntyre said he thought the 20c per share cash component would have been higher, saying the ''heavy scrip'' aspect of the bid made it less attractive.
''The heavy scrip component is likely to be an issue especially for holders of the ASX listed securities, although BGR intends on applying for a listing of the combined group on the ASX,'' Mr McIntyre said.
He said the main drawback of the BGR scrip bid for investors was that it ''significantly altered'' their exposure to risk, moving from a specialty adventure wear retailer, which does have the potential for a positive turnaround, to instead be investing in a widely diversified retail group.
Mr McIntyre noted that regardless of how high later valuations are by stock brokers, KMD's board, or BGR, many medium to long-term KMD investors ''would be feeling pain'', having purchased shares in a $3 to $4 range during periods of 2013-14.
''KMD's long-standing sales model, centred on three key sales periods a year, has not resonated with Australian consumers over the last 12 months, creating a serious issue for the incoming chief executive,'' Mr McIntyre said.
He emphasised KMD was only part way through its most important sales period of the year and a trading update will be crucial in assessing the extent of the issues in the business, and therefore central to views on its actual fair value.
