DAWNAY DAY, the vehicle of Guy Naggar, the Gallic City financier, yesterday showed its hand with a £42 million indicative offer for Austin Reed, three years after it began building a stake in the 106-year old British retailer.
Shares in the retailer gained 7 per cent in intraday trading to 126.7p, on news of the 131p per share offer, which represents a 10 per cent premium to the previous day’s closing share price.
Dawnay Day, which holds 29.88 per cent of Austin Reed, said it has approached the board of the retailer to seek its recommendation on a possible cash offer.
However, it cautioned the approach “did not amount of a firm intention to make an offer and, accordingly, there is no certainty that an offer will be made.”
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Dawnay Day, which controls up to £3 billion of property assets, is said to primarily be interested in the clothing retailer’s flagship store on Regent Street, London, which is worth about £24 million, more than half of Austin Reed’s market cap.
It begun building a stake in Austin Reed in June 2003, fuelling speculation of a takeover attempt, at the same time as the retailer rebuffed a number of other bid approaches from parties including from Jonathan Rowland, son of David “Spotty” Rowland, the property developer.
Nigel Robertson, the grandson of Austin Reed’s founder, also expressed interest but could not garner support.
Dawnay Day consolidated its holding in Austin Reed a year later with the purchase of the 9.2 per cent stake held by Shami Ahmed, the Joe Bloggs jeans entrepreneur.
The active investment company, which took the Chez Gerard, Bertorelli and Livabait restaurant business private last year in a £28.9 million deal, is thought to support Austin Reed’s management team, led by chief executive Nick Hollingworth, and if successful, is not expected to parachute its own executives into the retailer.