Billionaire businessman acquires 52% of struggling retailer Bon Marché
Spectre Holdings – a Dubai-based holding company owned by billionaire businessman Phillip Day – has conducted a takeover of Wakefield-headquartered women’s retailer Bon Marché after unconditionally acquiring 52% of its shares for £3m. The firm is to make a further £2.73m offer to acquire the remaining shares of the struggling retailer.
It has snapped up 26m Bon Marché Holdings shares from BM Holdings S.A.R.L. at a price of 11.4p per Bon Marché share; totalling £3m. Spectre is now required to make a mandatory cash offer for the Bon Marché shares not already held by Spectre at a price of 11.4 p per Bon Marché share. This would total £2.73m and take the total takeover acquisition cost to £5.73m.
Rule 9 of the Takeover Code requires that where a person acquires an interest in shares which carry 30% or more of the voting rights of a company, they are required to make a mandatory cash offer for the entire issued equity share capital of the company.
The new owners have set out detailed review plans as to what they intend to focus upon to turnaround the business. Spectre said: “As a result of its review, and based purely on publicly available information, Spectre expects a material reduction in headcount across Bon Marché.” It added that it would conduct a thorough store-by-store review, stating: “Those stores identified as underperforming may be closed unless reduced rents, staff reductions or other cost saving measures can be successfully implemented.”
Phillip Day is a businessman and owner of The Edinburgh Woollen Mill Group. He started his career at clothing manufacturers Coats Viyella and Wensum before being headhunted to join Aquascutum at the age of 28. He remained at the brand for five years, becoming Joint Managing Director.
In 2001, Philip Day left Aquascutum and joined The Edinburgh Woollen Mill, where he led a buyout of the company backed by Rutland Fund Management, a private equity firm. In 2002 he undertook a secondary buy out of the Rutland interest. He has continued to invest in both retail and non-retail opportunities including the purchase of Peacocks, Proquip, Austin Reed, Country Casuals, Jaeger and Jacque Vert brands in the UK.
Listed Bon Marché has over 300 stores and concessions across the UK and was admitted to AIM in November 2013, moving to a Main Market listing in October 2015.
The women’s retailer has recently released several negative trading updates, including the announcement on the 19 March when the board announced an estimated underlying pre-tax profit of between £5m – £6m for the year ending 31 March 2019. The estimated loss has increased materially from the announcement made in December 2018 when the board announced it estimated underlying pre-tax profit for the year to range from breakeven to a £4m loss.
For the most recent audited financial full year ended 31 March 2018, Bon Marché reported pre-tax profit of £800,000 on turnover of £186m. The unaudited interim results to 29 September 2018 reported pre-tax profit of £2.3m on turnover of £97.9m.
Spectre said: “Against the backdrop of the significant decline in Bon Marché’s profitability, Spectre believes it is well positioned to provide advice, guidance and support to secure the long term future of the Bonmarché business, its stores and employees. The owner of Spectre, Philip Day, has a successful track record within the retail sector, especially in turnaround and distressed situations.
Spectre is a Dubai registered entity incorporated in March 2017 and is owned by Philip Day. Prior to making the Acquisition, Spectre had not traded.
The holding company said it would complete a store-by-store profitability assessment with the intention of identifying all current stores that do not make an acceptable contribution to the performance of the business as a result of inappropriate rent levels, staffing levels, or other factors.
Spectre said: “Those stores identified as underperforming may be closed unless reduced rents, staff reductions or other cost saving measures can be successfully implemented.”
It set out intentions to review the current product range and future range plans. The firm added: “From Spectre’s current knowledge, it believes Bon Marché would benefit from range rationalisation and a more attractive and coherent proposition for its customer, which would include reducing the number of stock keeping units.”
Spectre will also review pricing policy and discount strategy with a view to restoring the gross margin achievement of the business by implementing a “first price, right price” policy. It will also analyse all existing product supply arrangements (price and delivery) with a view to renegotiating supplier terms where it believes these are currently less commercial than available in the wider market. “It is difficult to assess the potential savings available at this stage as Spectre has not had access to any supplier contracts,” the firm added.
It said that it would “review staffing and working practices at the UK distribution centre to ensure these are optimised.” Adding: ” It should however be noted that it has no intention of closing this facility.”
Spectre will also assess the size, cost and effectiveness of the head office functions within Bon Marché. The firm added: “Spectre would expect, based on experience in the market in which Bonmarché operates and the potential move from being listed on the Main Market to being a private company, there will be significant opportunities for cost reduction from within the central overhead. It is not Spectre’s intention to close or relocate the head office.”
Spectre added: “In carrying out its review, Spectre will call upon appropriate expertise and sector experience support from Philip Day’s wider retail business interests. Spectre believes the review detailed above will take approximately three to four months following discussions with Bonmarché management and access to the relevant information.
“As a result of its review, and based purely on publicly available information, Spectre expects a material reduction in headcount across Bonmarché.
“Following its review, if Spectre deems that any material changes are necessary to the Bonmarché business, Spectre will work with the board to implement these measures and update Bonmarché Shareholders accordingly. It is Spectre’s intention to ensure the long-term future of the Bonmarché business, its stores and employees.
“Spectre recognises the importance of the Bon Marché management team and employees to the future success of the business and maintaining a balance of skills and functions. Spectre cannot however know, until it has completed its review with management what, if any, changes will ultimately be required and whether these might have an impact on the conditions of employment and the continued employment of the management and employees of Bon Marché.
“Spectre will however ensure that the existing statutory employment rights, including any pension rights, of the management and employees of Bonmarché will be fully safeguarded. Spectre notes that Bon Marché has a defined contribution pension plan (through which it contributes to employees’ individual pension arrangements) and does not have a defined benefit pension plan.”
