REG - Dest Maternity CorpMothercare PLC - Withdrawal of Proposal to Combine with Mothercare <Origin Href="QuoteRef">MTC.L</Origin>

MothercareAnnouncement

06/09/2014 20:41

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RNS Number : 4066N
Destination Maternity Corporation
25 July 2014 
 
Destination Maternity Corporation 
 
Withdraws Proposal to Combine with Mothercare 
 
Philadelphia, PA, 25 July, 2014 - Destination Maternity Corporation
(Nasdaq:DEST) ("Destination Maternity") today announces that it does not
intend to make an offer for Mothercare plc ("Mothercare" or the "Company") 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. 
 
We believe that there was a strong strategic rationale for the combination of
these highly complementary businesses, which would have enhanced the product
range of both companies, spanning the pregnancy to toddler life-cycle.  We
further believe the combination would have created a global leader in
maternity, baby and children's apparel and products capable of accelerating
the growth and long-term development of both businesses across channels and in
markets around the world.  In addition, we believe that Destination
Maternity's management expertise and strong maternity apparel offering would
have provided an attractive enhancement to the Mothercare UK turnaround plan. 
 
Our proposals to Mothercare about a possible combination show our willingness
to pursue potential opportunities to help drive shareholder value for
Destination Maternity and are consistent with our stated strategic objective
to enhance our position as a global leader in maternity apparel, including
through international expansion.  At the same time, our announcement today
that we do not intend to make an offer for Mothercare demonstrates that we
will continue to maintain strict financial discipline in evaluating potential
initiatives and opportunities. 
 
We will continue to focus on delivering our strategy to drive sales and profit
growth, both in the United States and through the continued expansion of our
brands internationally." 
 
This announcement is made in accordance with Rule 2.8 of the Code.  As a
result of this announcement Destination Maternity will, together with any
party acting in concert with it, be bound by the restrictions contained in
Rule 2.8 of the Code. 
 
A copy of this announcement will be available on Destination Maternity's
website at www.destinationmaternitycorp.com. 
 
About Destination Maternity 
 
Destination Maternity Corporation is the world's largest designer and retailer
of maternity apparel.   In the United States and Canada, as of June 30, 2014,
Destination Maternity operates 1,901 retail locations, including 575 stores,
predominantly under the tradenames Motherhood Maternity, A Pea in the Pod, and
Destination Maternity, and 1,326 leased department locations, and sells on the
web through its DestinationMaternity.com and brand-specific websites. 
Destination Maternity also distributes its Oh Baby by Motherhood collection
through a licensed arrangement at Kohl's stores throughout the United States
and on Kohls.com.  In addition, Destination Maternity has international store
franchise and product supply relationships in the Middle East, South Korea and
Mexico.  As of June 30, 2014, Destination Maternity has 77 international
franchised locations, including 18 Destination Maternity branded stores and 59
shop-in-shop locations. 
 
Enquiries: 
 
Bank of America Merrill Lynch 
 
Peter Bell / David Russell / David Finkelstein                        +44 207
996 1000 
 
Brunswick UK 
 
Tim Danaher / Mike Smith                                                     
+44 207 404 5959 
 
Brunswick U.S. 
 
Jayne Rosefield / Christopher Beattie                                    +1
212 333 3810 
 
Statement by Financial Adviser 
 
Merrill Lynch, Pierce, Fenner & Smith Inc. and Merrill Lynch International
("Bank of America Merrill Lynch"), subsidiaries of Bank of America
Corporation, are acting exclusively for Destination Maternity in connection
with the possible offer and for no one else and will not be responsible to
anyone other than Destination Maternity for providing the protections afforded
to their clients or for providing advice in relation to this announcement or
any matters referred to herein. 
 
Forward-Looking Statements 
 
Destination Maternity cautions that any forward-looking statements (as such
term is defined in the Private Securities Litigation Reform Act of 1995)
contained in this press release or made from time to time by management of
Destination Maternity, including those regarding potential acquisitions and
various business initiatives, involve risks and uncertainties, and are subject
to change based on various important factors. These forward-looking statements
can be identified by the fact that they do not relate only to historical or
current facts. Forward-looking statements often use words such as
"anticipate", "target", "expect", "estimate", "intend", "plan", "goal",
"believe", "hope", "aim", "continue", "will", "may", "would", "could" or
"should" or other words of similar meaning or the negative thereof. The
following factors, among others, in some cases have affected and in the future
could affect Destination Maternity's financial performance and actual results
and could cause actual results to differ materially from those expressed or
implied in any such forward-looking statements: the possibility that an offer
will or will not be pursued, failure to obtain necessary regulatory approvals
or required financing or to satisfy any of the other conditions to the
proposed acquisition, adverse effects on the market price of Destination
Maternity 's common stock and on Destination Maternity 's operating results
because of a failure to complete the proposed acquisition, failure to realise
any benefits of the proposed acquisition,, the continuation of the economic
recovery of the retail industry in general and of apparel purchases in
particular, our ability to successfully manage our various business
initiatives, our ability to successfully pursue, complete and manage any
acquisitions and related matters, the success of our international business
and its expansion, our ability to successfully manage and retain our leased
department and licensed relationships and marketing partnerships, future sales
trends in our existing retail locations and through the Internet, unusual
weather patterns, changes in consumer spending patterns, raw material price
increases, overall economic conditions and other factors affecting consumer
confidence, demographics and other macroeconomic factors that may impact the
level of spending for apparel, expense savings initiatives, our ability to
anticipate and respond to fashion trends and consumer preferences,
unanticipated fluctuations in our operating results, the impact of competition
and fluctuations in the price, availability and quality of raw materials and
contracted products, availability of suitable store locations, continued
availability of capital and financing, our ability to hire and develop senior
management and sales associates, our ability to develop and source
merchandise, our ability to receive production from foreign sources on a
timely basis, potential stock repurchases, our ability to generate sufficient
free cash flow to continue our regular quarterly cash dividend, the trading
liquidity of our common stock, changes in market interest rates, our ability
to successfully manage and accomplish our planned relocations of our
headquarters and distribution operations with minimal disruption to our
overall operations, war or acts of terrorism and other factors set forth in
Destination Maternity 's periodic filings with the U.S. Securities and
Exchange Commission (the "SEC"), or in materials incorporated therein by
reference. Although it is believed that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be given that such
expectations will prove to have been correct and persons reading this
announcement are therefore cautioned not to place undue reliance on these
forward-looking statements which speak only as at the date of this
announcement. Destination Maternity assumes no obligation to update or revise
the information contained in this announcement (whether as a result of new
information, future events or otherwise), except as required by applicable
law. 
 
Nothing contained herein shall be deemed to be a forecast, projection or
estimate of the future financial performance of Mothercare, Destination
Maternity or the combined business following completion of any transaction
unless otherwise stated. 
 
This information is provided by RNS
The company news service from the London Stock Exchange