Surfstitch rejects takeover bid from Coastalwatch

surfstitchA company that is suing Surfstitch has lobbed a $55 million takeover offer for the embattled online clothing and sports equipment retailer.

Surfstitch says it has fielded a number of unsolicited takeover offers, including one from Coastalwatch which is suing the former over a fallout around a content sharing deal.

The online surfing goods retailer announced it has received a non-binding indicative proposal for 100 per cent of the company’s shares from Coastalwatch, a website that delivers surfing reports and forecasts.

Coastalwatch, which is linked to Crown Financial, a 10.4 per cent stakeholder in the target, is offering 20 cents a share for Surfstitch – valuing the company at $55.4 million.

A committee of the board has been formed, comprised of chairman Sam Weiss and CEO Mike Sonand, to handle the litigation and related matters.

“The board has formed the view that the indicative proposal is not in the best interests of the company because of the highly conditional nature of the offer,” Surfstitch said in a statement on Wednesday.

It also said the fact Coastalwatch and Crown Financial have raised legal actions against Surfstitch and continue to pursue litigation, also detracts from the offer.

The company added that the indicative price of 20 cents per share contained in Coastalwatch’s indicative proposal, although slightly above the company’s most recent 30-day VWAP of 19 cents per share, does not, in the company board’s view, reflect an appropriate premium for securing control of Surfstitch.

Surfstitch, which reported a full-year net loss of $155.4 million for 2015/16 in August, says it is assessing a number of other non-binding and indicative expressions of interest.

“None of these is at an advanced stage and there is no assurance that any will lead to a transaction,” it said.

Shares in Surfstitch were up one cent to 18.5 cents at 1436 AEDT.

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