Eddie Stobart and Carpetright shareholders poorly served by bids
Recent takeover approaches for haulage operator Eddie Stobart Logistics (ESL:AIM) and flooring retailer Carpetright (CPR) are providing a raw deal for retail investors as major shareholders take control.
Investors in Eddie Stobart, famous for the distinctive livery on its heavy goods delivery trucks, face significant losses once currently-suspended shares reopen for trading after the board agreed a ‘rescue bid’ from a private equity fund.
DBAY Advisors, Eddie Stobart’s former controlling shareholder, will acquire a 51% stake, and in return it will provide £55m through a high interest ‘pay later’ type of loan. Eddie Stobart has been hit by weak trading and an accounting scandal.
DBAY’s arrangement doesn’t look attractive for the rest of the shareholder base. It implies a £107m valuation for the business, well below its £269m market cap before shares were suspended in August at 71p.
Meanwhile, former boss Andrew Tinkler is reportedly set to table a rival £75m offer.
Tinkler’s bid, reports of which emerged over the weekend, relies on £40m from institutional investors (said to be fund firms M&G and Ruffer) and £25m from a rights issue, with £10m coming from his own pocket.
However, a Tinkler bid has been mooted since September and is yet to materialise, while a rights issue with the company’s shares suspended will be difficult to pull off.
Fellow transport group Wincanton (WIN) has shown interest in buying Eddie Stobart but the firm is still seeking information on underlying profit and cash flow before deciding whether to act.
In the retail sector, long suffering holders of Carpetright shares have lost out on a long-term view. In 2007, shares in Carpetright peaked at north of £12, but the board has now recommended a lowball 5p per share bid from near-30% shareholder Meditor to take the business private.
The cash offer values restructured but still cash-strapped Carpetright at just £15.2m. The business has been clobbered by crippling rents, frail consumer confidence since the Brexit vote and intensifying floor coverings market competition.
Away from the glare of the public markets, Meditor’s poker-playing boss Talal Shakerchi will look to take on Carpetright’s bitter rival Tapi by investing in the store estate and ‘driving new initiatives and improvements’.