Johnston is set to control more than 50 per cent of voting rights through his vehicle Arcade Finance after securing the support of major shareholders.
15.13 per cent stakeholder NGE Capital and 4.6 per cent holder Kentgrove Capital publicly expressed their intention to support the bid on Friday Morning.
Johnston had built up more than 37 per cent of the company by Thursday night, increasing his offer by 1.5 cents per share to 33.5 cents in a bid to hurry along the takeover.
The bid, which was first unveiled last month, will cost Johnston $10.2 million in total under the new offer, a 63.4 per cent per share premium on the closing price of Godfreys on the day before the offer was first announced.
Johnston’s vehicle Arcade Finance said on Thursday that it intended to make its offer to purchase the business unconditional and will declare the bid as free of all defeating conditions if it achieved 50.1 per cent of voting rights.
Arcade is hoping to purchase the business and execute a turnaround plan after several years of deteriorating performance from the specialist retailer.
The company appointed a new chief executive, Jason Gowie, earlier this year to steer a renewed turnaround effort but revealed earlier this month that initial experiments with new marketing tactics had led to a startling 27 per cent decline in sales in just two weeks.
Arcade expressed concern on Thursday that the turnaround plan was damaging the business.
“Arcade is concerned that the disappointing recent financial performance of Godfreys, and the lack of positive impact from the turnaround strategy, will damage Godfreys’ future business prospects,” Arcade said. “As such, Arcade is willing to offer improved terms in order to encourage a speedy completion of its offer.”
Godfreys is also at risk of defaulting on its debt facility with a Johnston associated entity before the end of the year.
Godfreys board recommended that the offer be accepted earlier this month alongside an independent expert’s report which deemed Johnston’s offer to be fair and reasonable.
Johnston, who first joined the business in 1936, has been involved with the company for most of his life, although the business has changed hands several times in recent years, having been bought by private equity in 2006 before being bought back by Johnston and others in 2011 and listed on the ASX in 2014 at $2.75 a share.
Being slow to respond to shifting demand toward stick vacs and increasing competition from the likes of Harvey Norman and JB Hi-Fi have been blamed for its deteriorating performance in recent years.
UPDATED 18/05/2018 – 14:04 AEST