Discount retail chain The Reject Shop has agreed to a $259 million takeover by Canadian value retailer Dollarama, with its biggest shareholder already flagging they will back the deal.
Dollarama, which is based in Montreal and listed on the Toronto Stock Exchange, has offered to pay Reject Shop shareholders $6.68 in cash per share, more than double the stock’s $3.15 closing price on Wednesday. The Australian discounter’s board has advised shareholders to support the takeover at a special shareholder meeting in June.
The Reject Shop could soon be Canadian-owned.
Board chairman Steven Fisher called the Canadian bid a “milestone” for the company.
“The board believes the proposed transaction will benefit both shareholders and stakeholders of The Reject Shop and is in line with the board’s priority to deliver shareholder value,” he said in a statement to the ASX on Thursday morning.
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The Reject Shop’s largest shareholder, Kin Group, which owns about 20.8 per cent of the discount retailer, said it would sell its shares to the Canadian suitor if an independent expert concludes the deal is in the best interest of shareholders.
The takeover, if approved by shareholders, is expected to be completed in the second half of this year.
The Reject Shop owns 390 convenient stores across Australia. Dollarama, which runs a chain of more than 1600 shops in Canada selling items for up to $C5 ($5.56) apiece and also controls a chain of 588 discount stores in Colombia, Guatemala, El Salvador and Peru, said it was the “right opportunity to expand into new geographies and build on our track record as a leading value retailer in Canada and Latin America”, according to its CEO Neil Rossy.
More to come
