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Best & Less (ASX: BST) has scrapped plans to put The Iconic CEO Erica Berchtold in the top job in September, as an off-market takeover from Brett Blundy and Ray Itaoui rolls down the aisle and is due to reach the check-out by the end of this month.
BBRC, a retail investment business associated with Sanity founder Blundy and Honey Birdette co-founder Itaoui, made its discounted $1.89 per share takeover offer around a fortnight after Berchtold's appointment was announced, and since then has secured a voting power of 71.54 per cent in Best & Less (BLG).
The offer is now unconditional and is set to close on 30 June, with an independent board committee warning that a decline in trading performance means the BST share price could materially fall once the offer is closed.
On Tuesday the company reported an 11.7 per cent year-on-year drop in sales over the past month, prompting a net profit after tax (NPAT) downgrade to $3.6-4.2 million - well below original guidance of $18-20 million.
"Accordingly, the IBC recommends that those shareholders who have a shorter-term horizon for their investment in BLG or who have concerns about their future ability to exit their holdings should ACCEPT NOW," board committee chair Stephen Heath wrote in a letter to shareholders.
"Shareholders who have a longer-term investment horizon and are comfortable in remaining a minority shareholder in BLG may consider ‘taking no action’," he said, noting there were risks as detailed in the target statement dated 22 May.
When the takeover proposal was first announced, Heath said the offer did not contain a 'typical control premium' but was considered nonetheless given two other major shareholders - Allegro and Bignor Family Pty Limited - had shown interest.
Bignor is associated with former chairman Jason Murray, who relinquished his shares earlier this month and had passed on his role to Itaoui as executive chair on 5 June.
In its Tuesday trading update, Best & Less reported Itaoui had "rapidly implemented a range of actions to position BLG for more challenging trading conditions", such as accelerating promotional and discount activity to clear winter stock, reducing yearly inventory, and expense management initiatives.
Itaoui's executive duties were originally for an interim period, but today it was announced the role would become full-time for him.
"Consequently, the Company and Erica Berchtold have agreed not to proceed with her appointment as Group Chief Executive Officer of BLG, which had been proposed to be effective from 4 September 2023," the company stated in its ASX announcement this morning.
"Mr Itaoui has considerable retail experience, having operated successful Australian and global retail businesses for more than two decades, including iconic brands such Sanity, Bras N Things and Honey Birdette."
Itaoui said he was excited to lead Best & Less and committed to taking the decisive action necessary to position the company for the current challenging trading conditions.
"I believe strongly in BLG’s potential to extend our leadership position in the value segment, leveraging our unique offer, privileged relationship with our customers, and the capability of BBRC," he said.
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