Mothercare rejects £266m Destination Maternity offer

Mothercare, the UK mother and baby retailer, has rejected two merger proposals from Destination Maternity, the US retailer.

Destination Maternity said its latest proposal was worth 300p per Mothercare share, a 29pc premium to the British company's 232.5p closing price on Tuesday and valuing the company at £266m.

Shares in Mothercare rose 13pc to 269p in response to the news as the market opened on Wednesday.

Destination Maternity said in a statement that it believed its latest increased proposal, delivered on June 1, provided "a strong basis for discussions between the parties but Mothercare has refused to engage with Destination Maternity on its proposals".

It has proposed a merger under a new UK holding company, which would be listed in the United States and create a global leader in maternity, baby and young children's apparel and products with sales of $1.7bn ( £1bn) and 4,300 outlets.

Ed Krell, chief executive of Destination Maternity, said: "We believe there is a compelling strategic rationale for a combination of Destination Maternity and Mothercare, which would create the undisputed global leader in maternity, baby and young children's apparel and products.

"Mothercare and Destination Maternity are highly complementary businesses, with strong and trusted brands in their respective markets. Together, a combined company would provide a global platform to expand both Destination Maternity's maternity apparel business and Mothercare's baby and children's business."

Destination Maternity said it continued to to evaluate its options with regard to a possible combination, with Mr Krell adding: "We are seeking to engage with the Board of Mothercare on a constructive basis with the goal of completing a recommended transaction."

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