Arnotts board rejects €200m offer

The board of department store Arnotts yesterday rejected a €200 million offer to buy the company tabled by one of the two families who own the business.

The O'Connor family, who own 24.7 per cent of the retailer, declared its intention to offer €200 million for the entire share capital of Arnotts in a letter to majority shareholder Richard Nesbitt on Friday.

Malpas Holdings, the O'Connor family vehicle, said it "believes that the decision of the board of directors is contrary to the interests of all shareholders.

"The directors of Malpas intend to fully consider the implications of this decision by the board of the company before deciding on their next course of action."

Mr Nesbitt effectively controls 60 per cent of the company, and rubbished the offer as a "stunt" in a letter he sent last weekend to the remaining shareholders, who are also members of the Nesbitt family.

He said he believes it is an attempt to force the company to buy out the O'Connors at an inflated price.

At the weekend, Mr Nesbitt said he would personally buy them out for €25 million.

Their cash offer values their own stake at twice this figure.

However, the O'Connors maintained that their bid stands, is fully funded and should be put to all Arnotts shareholders.

It is conditional on due diligence being completed.

The offer is equivalent to €50.57 a share, three times the €14.26 a unit paid when they and the Nesbitt family bought out the company and had it delisted from the Dublin Stock Exchange in 2003.

It is also based on debts of €310 million.

When this is taken into account, the offer values the entire business at €510 million.

The board held a scheduled meeting yesterday.

It also rejected the offer and decided against referring it to the company's other stakeholders.

The O'Connors subsequently issued a statement saying that they were disappointed with the outcome.

"The decision is most surprising, particularly as the offer values Arnotts at between €70 million and €100 million above the valuation placed on the company by Mr Richard Nesbitt, chairman," the statement said.

The statement added that the offer is designed to preserve the company's value for all shareholders.

While Mr Nesbitt has said that he is not interested in selling in any case, he also argued that the O'Connors' offer overvalues the company as it underestimates Arnotts' debts by between €80 million and €90 million.

On that basis, he argued that the company is more likely to be worth between €100 million and €130 million.

In that situation, Mr Nesbitt claimed that Malpas and the O'Connors would not be able to raise the bank loan needed to support a €200 million cash offer for the company.

However, the O'Connors' statement said that their estimate of the debt was based on figures submitted to the Arnotts board.

Relations between the two families have soured over the past four years.

It is understood that part of the conflict is based on Arnotts' €750 million plan to develop its properties around Dublin's Henry Street.