Instore rejects £11.4m takeover bid

THE struggling owner of the Poundstretcher chain, Instore, has rejected an £11.4m takeover bid from a cash & carry magnate.

The Huddersfield-based group dismissed the offer, which is lower than Instore’s share price, and said it “significantly undervalues” the company.

The offer came from food wholesaler Crown Crest, which is run by cash & carry entrepreneur Aziz Tayub, and already owns just over 30% of Instore.

Crown Crest offered 5p a share in cash for the retail chain, a 4.8% discount to Instore’s closing price on June 13, the day before it announced a takeover approach.

Another major shareholder, South African group Tradegro, has backed Crown Crest’s offer with 20.4% of its 35% stake in Instore.

That would give Crown Crest control of the company with 51% of the shares and then smaller shareholders will have to decide whether to accept the offer.

However the fact that Tradegro has not committed its entire shareholding shows that it is considering other possible options for the business.

Instore’s shares closed up 6% last night at 6.4p.

Advisers to Crown Crest, KBC Peel Hunt, believe that given the current state of the retail market, the offer is a “reasonable” one.

However Martin Payne of the Leeds office of stockbrokers Brewin Dolphin, commented: “The fact that the offer is at a discount to the market price of the shares would suggest an optimistic approach or that the company is possibly in more difficulty than was apparent when the takeover approach was made in June.”

Instore reported a £7.4m loss in the year to March 1.