Beales has agreed to a recommended cash offer from English Rose, a vehicle controlled by outspoken property investor Andrew Perloff.
Under the terms of the offer, Beales shareholders will be entitled to 6p in cash for each share. The offer values the entire issued ordinary share capital of the deppartment store group at approximately £1.23m - about half of the retailer’s market capitalisation this morning.
Perloff is also chairman of property investment company Panther Securities. Last year he publicly attacked Beales when it removed the property firm’s representative from its board.
Beales said English Rose’s offer was “disappointing” and that in “different circumstances” it could have “achieved a price that would value the business and assets of Beales more fully”.
Beales explained: “The complex capital structure inherited by the current Beales board imposes a number of restrictions on Beales’ ability to fund its activities, including the requirement for the concert party [Perloff and associates] to agree to any of the alternative funding options the Beales board has identified.
“As a result, Beales may be unable to generate sufficient cash flows to meet its financial commitments in the future. Accordingly, the Beales board believes that Beales shareholders should carefully consider the future risks facing the Beales Group and may wish to accept the offer, depending on their own individual circumstances and appetite for risk.”
Beales chief executive Michael Hitchcock told Retail Week that the offer will help fund investment in the retailer’s estate. “Beales is turning around but the pace needs to increase…the estate hasn’t had any investment in 10 years and needs refreshing and refitting.”
He added: “It’s a good move for Beales. Andrew has said he will honour employees’ jobs, the pension scheme and [existing] concessions…we have a great business here, we just need capital to take it forward.”
Beales chairman William Tuffy said: “English Rose’s proposal offers the certainty of a cash exit for shareholders today and improves the medium term financial security of the Beales business.
“Despite the significant progress made by the current management team in first stabilising and then greatly improving operating performance, the business continues to face significant challenges and financial constraints.
“The board of Beales has explored all other realistic alternatives to raise additional capital to address these challenges and constraints but none could be delivered without the concert party’s agreement and consequently, we believe that this proposal represents a better alternative for all stakeholders than the business continuing with its current capital structure, given the level of risk this would entail.”
The retailer said sales had slipped 0.6% in the 19 weeks to September 13. In the 45 weeks to the same date, sales fell 3.5%.