Unbound Group, the owner of British footwear retailer Hotter Shoes, is considering accepting a takeover bid by knitwear specialist WoolOvers Group Limited.
In a statement Tuesday, Unbound said it is “in discussions with WoolOvers Group in relation to a possible cash offer for the entire issued and to be issued share capital of Unbound”.
It said the terms of the deal would see Unbound shareholders receive 10.5 pence in cash and 1 contingent value right per share they own in the group.
The terms of the cash consideration represent a premium of approximately 162.5 percent to the Unbound closing share price on Monday March 27.
However, the share price in the company doubled following the news to 8 pence a share on Tuesday. WoolOvers Group has until April 25 to make a bid.
In January, Unbound Group - formerly known as Electra Private Equity - warned that its final five months of the year were “significantly” impacted by various factors including an extended period of hot weather, the impact of Royal Mail industrial action, and “broader economic conditions”.
It said that following “a strong start to the year”, revenue growth slowed “with a poor Q3 and November performance and a small return to growth in December and in January to date”.
Accordingly, the company lowered its full-year outlook, expecting revenue of around 53 million pounds to 54 million pounds, which would represent year-on-year growth of around 3 percent to 4 percent.
It said at the time its gross margins had been “broadly in line with expectation”, so it expects to incur a pre-IFRS16 adjusted EBITDA loss of between 0.75 million pounds and 1.25 million pounds, and an adjusted pre-tax loss of 4.25 million pounds and 4.75 million pounds.