ASX-listed vacuum retailer Godfreys Group Ltd (ASX: GFY) is the subject of a takeover offer from Arcade Finance Pty Ltd, Godfreys’ largest shareholder with a 28% holding. The takeover offer is priced at $0.32, which compares to Godfreys’ recent share price of $0.21.
“I co-founded Godfreys with Godfrey Cohen in the 1930s,” John Johnson wrote in a letter to Godfreys shareholders. “Since then I have been a strong supporter of Godfreys. I am a director of Arcade, which is the largest holder of Godfreys shares.”
Godfreys shares have come under intense selling pressure since the company listed on the ASX in 2014. After reaching a high of $3.55 in 2015, the Godfreys share price has continued to decline to its current price of $0.21.
At the current share price, all of Godfreys’ shares are worth just $8.5 million, according to Yahoo! Finance.
Johnson says the Arcade offer is promising given the share price decline. “This Offer is particularly attractive in the context of Godfreys’ continued long-term share price decline, 1H18 Results, level of debt and where, on February, 2018 the Godfreys Board announced that the interim dividend is not going to be paid.”
In February, Godfreys announced a near 9% fall in half-year revenue to $84 million with a net loss of $58.6 million. Last year’s dividend of 2.5 cents per share was cut.
Arcade is an associate of the company 1918 Finance, which provided $30 million of debt to Godfreys. “Arcade believes that the restructuring required to restore Godfreys’ value would be best carried out in an un-listed private company environment.”
Godfreys Response
In an announcement to the ASX today, Godfreys’ management advised their shareholders to “take no action”.
“The Directors will carefully consider the proposal by Arcade as announced,” the company said. An independent valuer will be engaged to determine if the offer is fair and reasonable.
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