Destination Maternity Withdraws Proposal To Buy Mothercare

(RTTNews) - Maternity apparel retailer Destination Maternity Corp. (DEST) announced Friday that it does not intend to make an offer for UK-based mother and baby apparel retailer Mothercare Plc (MTC.L) and is withdrawing its proposal for a possible combination.

It was on July 2 that Destination Maternity confirmed, responding to press speculation, that it has submitted two non-binding written proposals to Mothercare, but were rejected by Mothercare Board.

Mothercare has refused to engage with Destination Maternity on its latest increased proposal, which values Mothercare at about 266 million pounds or $453 million.

According to Destination Maternity, its proposal was compelling, but 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, the company is unwilling to increase the value of its proposal and has therefore decided to withdraw its proposal.

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 ….. We believe that there was a strong strategic rationale for the combination of these highly complementary businesses, ... 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."

Destination Maternity said it will continue to focus on delivering its strategy to drive sales and profit growth, both in the United States and through the continued expansion of brands internationally.

Destination Maternity stock closed Friday's trading at $22.62, down $0.39 or 1.69 percent.