Carpetright ponder takeover bid as shares collapse

Carpetright plc (LON: CPR) shares fell sharply after the company said it is considering a acquisition offer from its lender Meditor European Master Fund Ltd.

Carpetright have been subject to slowing revenues, slowing profits and poor business performance after tough market conditions.

This comes as no surprise for the UK retailer, and many firms have alluded to tough political and economic conditions in hindering business opportunities.

High street retailers such as Dunelm (LON: DNLM) and Laura Ashley (LON: ALY) are the notable names who have seen their shares sink as a result of poor trading performance within the last three months.

The company added that it needed an £80 million injection to pay its debts, with net debt standing at £27 million.

Additionally, this cash injection will allow the chance to ‘meet its working capital needs and execute its growth strategy’.

Meditor’s potential cash offer would value Carpetright shares at 5.00p per share, amounting to £15.2 million in total, a 45% discount to its closing price of 9.12p.

Carpetright said: “The company has been actively exploring various long-term financing solutions including standard “high street” refinancing, asset-backed lending, strategic asset sales and equity financing.”

“Having now explored the viability of all of these possible options, the board announces that it is in discussions with Meditor in relation to a possible offer to acquire all of the issued and to be issued shares of the company, expected to be by way of a Scheme of Arrangement,” the firm added.

Investment management firm Aberforth Partners LLP, which has f a 13% stake, has backed Meditor’s potential takeover bid.

Chair Bob Ivell said: “Shareholders will be aware that we have been engaged in comprehensive refinancing discussions to replace existing facilities which expire at the end of this calendar year. The possible offer being announced today would put in place a new financing structure for Carpetright which would enable us to continue our recovery and make necessary investments in improving our business.”

Carpetright were quick to add that there is no certainty that a bid from Meditor will be made, speculating about where Carpetright will be able to raise these funds.

Seniority at the firm mentioned the positive trading figures amidst Brexit market conditions saying “”In the first half, like-for-like sales growth has been achieved in all territories, however the ongoing impact of negative consumer confidence and Brexit on the current retail environment could present a challenge in the balance of the financial year,”.

Shares of Carpetright are trading at 4.76p per share, falling 47.81% during Thursday trading. 31/10/19 12:08BST.

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