Greencross rejects takeover bid, again

petbarnVet clinics and pet products retailer, Greencross, has rebuffed a $770 million takeover offer from a private equity consortium and posted a sevenfold first half lift in profit to $18.7 million.

Greencross on Monday revealed it had received the offer at the weekend from the consortium of TPG Capital, The Carlyle Group and interests associated with the takeover target’s former chief executive, Jeff David.

The consortium is offering $6.75 per share, less the value of any dividend declared by the takeover target whose shares last traded at $6.39 on Friday.

But Greencross chairman, Stuart James, says the board believes the offer undervalues the company and it has declined to hold talks with the consortium.

The offer is a modest increase on the $6.65 per share offer made by TPG, one of the the consortium members, before Christmas which was also rejected by the company on basis that it undervalued the organisation.

“The board is of the view that this modestly increased price also fundamentally undervalues Greencross, and accordingly the board has declined to engage with the consortium,” said board chair, Stuart James.

James said the board and management have high confidence in Greencross’ potential for future growth.

“Our rollout of co-location centres servicing retail and veterinary service customers, together with our online strategy, is positioning Greencross at the heart of the fast growing Australasian pet care sector,” James said.

“The board is confident of the potential of this platform and also notes the strong performance of retail operations in east coast Australia and in New Zealand, as well as the robust cash performance of the business.”

The second takeover bid comes after the retailer posted a huge improvement on 2015’s first half results of $2.6 million. This came on the back of an 18 per cent increase in revenue to $362.7 million, driven by a 5.1 per cent boost to like-for-like sales and the addition of 28 new stores and clinics.

“GXL’s first half performance validates the board’s view of the long-term future value of the company and endorses the board’s response to recent opportunistic approaches which fundamentally undervalued Greencross,” chief executive Martin Nicholas said.

Greencross operates the Petbarn, City Farmers, Animates and Greencross Vets brands, with 209 stores, 142 clinics, 43 in-store grooming salons and 111 in-store dog washes across Australia and New Zealand.


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