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Destination Maternity Does Not Intend to Make an Offer for Mothercare Plc

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Core prompt:  Destination Maternity Corporation announces that it does not intend to make an offer for Mothercare plc and is withdrawing its proposal f

 Destination Maternity Corporation announces that it does not intend to make an offer for Mothercare plc and is withdrawing its proposal for a possible combination with Mothercare.

 On 2 July 2014, Destination Maternity made an announcement confirming its interest in a possible combination with Mothercare and confirming its submission of two non-binding written proposals for a possible combination, both of which had been rejected by the Board of Directors of Mothercare.  This announcement was required by the UK Takeover Code (the "Code") in light of press speculation at the time regarding Destination Maternity's interest in a possible combination with Mothercare.
 
Following the announcement on 2 July 2014, Destination Maternity's financial adviser canvassed the views of shareholders who hold a substantial proportion of Mothercare shares.  While Destination Maternity believes that its proposal was compelling, it is clear that the shareholders of Mothercare believe that only a very significant increase in the value of such proposal would be acceptable.  In light of this and considering Destination Maternity has not been permitted by the Mothercare Board to conduct customary due diligence, Destination Maternity is unwilling to increase the value of its proposal and has therefore decided to withdraw its proposal.
 
The Mothercare Board and certain Mothercare shareholders presented concerns to Destination Maternity's financial adviser regarding Destination Maternity's ability to finance the combination with Mothercare.  Destination Maternity had (subject to due diligence and certain other matters including the negotiation and execution of definitive documentation):  (1) negotiated the terms of an in-principle, non-binding, financing package consisting of equity and second-lien debt to be provided by a leading U.S.-based private equity firm; and (2) received in-principle, non-binding, support from Bank of America Merrill Lynch to arrange senior secured debt financing. These financing arrangements, if implemented, would have ensured an appropriate capital structure for the combined business.
 
Ed Krell, Chief Executive Officer and a Director of Destination Maternity, said, "We are disappointed that the shareholders of Mothercare have not supported our proposal and that the Board of Mothercare was unwilling to allow us to conduct customary due diligence and engage in discussions with us regarding our proposal.
 
 
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