Pacific Brands says there will be no takeover offer for the clothing maker, after discussions with potential suitors failed to reach a deal.
The company’s announcement on Tuesday that talks with private equity firms failed to reach a deal sent Pacific Brands shares tumbling and, according to one analyst, left the door open for a potential buyer to swoop.
The stock tumbled nearly nine per cent on the news, before recovering to close down 5.65 per cent, or 3.5 cents, at 58.5 cents.
City Index chief market analyst Peter Esho said other potential buyers of the firm that was the name behind Australian brands such as Bonds, Rio and Berlei could emerge should the share price drop to somewhere between 50 and 55 cents.
“The more the share price falls, the higher we think the likelihood of someone else coming in and pursuing a deal is,” Mr Esho said.
“It’s very attractive despite all the negative news.
“At 50 to 55 cents there’s a range of options that we think could encourage corporate activity.”
Pacific Brands said in a statement on Tuesday it had considered a number of approaches since January 2012 to buy the company.
However, the board concluded that a definite proposal to acquire the company was “unlikely to be forthcoming in the near term”.
In January 2012, Pacific Brands said it was considering a takeover approach from US-based private equity firm Kohlberg Kravis Roberts (KKR).
Although it did not disclose the value of KKR’s proposal, some estimates put it at about $600 million.
Pacific Brands said at its first half results presentation in February it had received other enquiries since the KKR proposal.
At the time it reported a $362.4 million loss after writing down the goodwill in its underwear business.
On Tuesday, Pacific Brands reaffirmed a weak full-year profit outlook, but said transformation and restructuring work, including a new Bonds retail store, a Sheridan online portal and focus on cost reduction, left it in a good position amid difficult trading conditions.
“The company remains well placed to deal with the challenges ahead of it and then to benefit from any improvement in market conditions,” Pacific Brands said.
Full year net profit after tax and before significant items was expected to be “materially down” from the prior year, the company said, with underlying sales also tipped to fall.
Mr Esho said Pacific Brands’ forecast for earnings before interest and tax and before significant items of $125 million to $130 million was in line with market expectations.
