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The board of MySale has asked its shareholders to accept Frasers Group takeover offer despite it “unanimously believing” that it undervalues the company.
The news comes after Frasers made a cash offer by Frasers for the entire issued and to be issued ordinary share capital of MySale, at 2 pence in cash per MySale Share not already held by it.
It said while the board continues to “unanimously believe that the offer undervalues the company and its future prospects”, however as a result of Frasers’s interest in MySale Shares, the board is now recommending that MySale Shareholders accept the offer.
It came to the conclusion that irrespective of whether the offer is declared unconditional or lapses, Frasers is expected to own an aggregate of at least 504,113,926 MySale shares or 48.48% of the voting rights in the company.
As such, the board believes that Frasers will be able to “exercise significant” control over the company such as being able to pass and/or block resolutions at any general meeting of MySale, including, amongst others, the appointment or removal of directors and disapplication of pre-emption rights with respect to MySale Shares.
The board added it believes that Frasers’s shareholding of 48.48% of the voting rights in the company “represents effective control”, the impact of which could be to change the strategy and capital structure of the company on a standalone basis.
It concluded: “When considering the shareholdings of Frasers and other substantial shareholders, the board believes the significantly reduced free float in the MySale Shares following the offer will further reduce the liquidity in trading of MySale Shares.
“As a result, the board believes that it could be very difficult for a MySale Shareholder who does not accept the offer to sell and monetise their shareholding in MySale in a reasonable timeframe without having a material impact on the price of MySale Shares.”
