Mothercare Stock Down As Destination Maternity Withdraws Takeover Proposal

(RTTNews) - Shares of Mothercare Plc (MTC.L) are currently trading around 6 percent lower in London after the U.S.- based maternity apparel retailer Destination Maternity Corp. (DEST) withdrew its takeover offer for the UK-based mother and baby apparel retailer.

In its statement today, Mothercare noted that its Board has had no contact with Destination Maternity since June 3. The company, with the appointment of Mark Newton-Jones as Chief Executive, is now fully focused on its plan to turnaround the UK business and to continue its strong International growth.

Mothercare added that the Board remains confident in the ongoing execution of its strategy as an independent company.

It was on July 2 that Destination Maternity confirmed, responding to press speculation, that it has submitted two non-binding written proposals to Mothercare, but were rejected by Mothercare Board. Mothercare has refused to engage with Destination Maternity on its latest increased proposal, which values Mothercare at about 266 million pounds or $453 million.

On last Friday, Destination Maternity announced that it is withdrawing its proposal for a possible combination.

According to Destination Maternity, its proposal was compelling, but it is clear that the shareholders of Mothercare believe that only a very significant increase in the value of such proposal would be acceptable. In light of this and considering Destination Maternity has not been permitted by the Mothercare Board to conduct customary due diligence, the company is unwilling to increase the value of its proposal and has therefore decided to withdraw its proposal.

Ed Krell, Chief Executive Officer and a Director of Destination Maternity, then said, "We are disappointed that the shareholders of Mothercare have not supported our proposal ….. We believe that there was a strong strategic rationale for the combination of these highly complementary businesses, ... we believe that Destination Maternity's management expertise and strong maternity apparel offering would have provided an attractive enhancement to the Mothercare UK turnaround plan."

Destination Maternity said it will continue to focus on delivering its strategy to drive sales and profit growth, both in the United States and through the continued expansion of brands internationally.

Mothercare are losing 16.25 pence or 6.29 percent, and trading at 242 pence.

Destination Maternity stock closed Friday's trading at $22.62, down $0.39 or 1.69 percent.