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January 26, 2011 11:00 pm
The board of Blacks Leisure has terminated discussions with all potential bidders, ending four months of takeover speculation.
Several interested parties had already walked away, including rival ourtdoor retailers Go Outdoors and Cotswold owner Lion Capital, and Lloyds Development Capital, which has a significant holding in outdoor specialist Mountain Warehouse. Two of Blacks’ shareholders, Pentland, which owns a majority stake in JD Sports, and Sports Direct, also failed to bid.
On Wednesday, Blacks confirmed its board had received “a number of indicative proposals” but that none were “sufficiently compelling” to take to shareholders. “The board has, therefore, terminated discussions to allow management to focus all of its efforts on completing the final stage of the turnround plan,” it said.
Previously, Neil Gillis, chief executive, had threatened to close the process down if no credible offers were forthcoming by the end of January, describing the bidding process as “very distracting”.
Analysts had questioned the likelihood of a bid emerging for more than 54p a share, the level of last May’s £20m placing. Blacks shares have traded below this ever since and fell 7 per cent on Wednesday to close at 35.69p.
The proceeds of the placing are being used to fund a store-opening programme. So far, 12 new stores have opened, with the 13th set to open in Glasgow in two weeks’ time. However, analysts are sceptical that this will restore profitability to the chain, which reported pre-tax losses of £8.49m at October’s half-year results.
Peter Smedley, retail analyst at Charles Stanley Securities, said: “We still see very limited profit recovery potential for Blacks given the intense competitive backdrop from the very operators mooted to have been in discussions with the company, such as Mountain Warehouse, Go Outdoors and Cotswold.”
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