Briscoes' hostile $362million, 100% takeover bid for Kathmandu has fallen flat, with shareholder and analyst scrutiny of the sports and leisure retailer's performance now expected to become intense.
The July takeover offer by Rod Duke of Briscoes (BGR) was aimed at absorbing Kathmandu (KMD) into the Briscoes operations, with the acceptances deadline for KMD's shareholders expiring yesterday.
In the end BGR only gained a less-than-25% stake, having started the play in July with an almost 20% stake, chasing the 80.1% it didn't already own.
Shareholder disinterest has been blamed on the cash component of the implied $1.80-per-share offer; it meant a 34% premium but offered shareholders just 20c cash for each share, with the balance made up with a swap for BGR shares.
KMD has been hard hit by a combination of the ailing Australian economy, unseasonal weather conditions, poor annual sales and subsequent high inventory levels.
However, since the takeover play management have been bullish on achieving a turnaround, which Mr Duke has publicly disputed.
KMD's past two full-year profits had declined from $44.2 million, $42.2 million, then booked a half-year loss of $1.8 million.
Since May 2014's high of $3.97 a share, it was down 60% to $1.57 yesterday.
Craigs Investment Partners broker Peter McIntyre said KMD's management had set ''ambitious targets'' and would now have to meet them, based on expectations of shareholders who did not sell out.
''Totally, the blowtorch will be on management now. Only management know how achievable those targets are,'' he said.
Despite unfavourable reports criticising Mr Duke's valuation of KMD, he did not come back to the market with a higher offer and would not extend the acceptances deadline.
There is always the possibility that if KMD's share price continues to suffer Mr Duke could swoop in at a later date and make another takeover play, possibly even smaller.
Mr McIntyre said ''Never say never ... if Duke sees potential for [positive] upside, he will be back.''
While there were some ''tailwinds'' for the retail sector in general, with low unemployment and low interest rates, for KMD that had not provided any buoyancy for its sales.
