Canadian discount store chain Dollarama has entered an agreement to acquire Australian retailer The Reject Shop for $259 million.
The acquisition price of $6.68 per share reflects a 112 per cent premium over The Reject Shop’s closing price of $3.15 on Wednesday.
“Attracting an offer from Dollarama, a recognised leader in the value retail market, is testament to both the meaningful improvement that our incredible team has made to our business over the past few years as well as the significant growth potential that exists for The Reject Shop,” Steven Fisher, The Reject Shop Chairman, said.
“The all-cash Scheme Consideration provides attractive value and certainty for all shareholders. The Board believes the proposed transaction will benefit both shareholders and stakeholders of The Reject Shop and is in line with the Board’s priority to deliver shareholder value.”
The Reject Shop’s largest shareholder, Kin Group Pty Ltd, which holds approximately 20.8 per cent of the company’s outstanding shares, has indicated its intention to vote in favour of the acquisition. This support is contingent on the absence of a superior proposal and an independent expert determining that the deal is in the best interests of shareholders.
Founded in 1992, Dollarama now has 1,601 locations across Canada and owns a 60.1 per cent interest in Dollarcity, a Latin American value retailer with 588 stores in Colombia, Guatemala, El Salvador, and Peru.
“Identifying the right opportunity to expand into new geographies and build on our track record as a leading value retailer in Canada and Latin America has been a key objective for the Dollarama team,” Neil Rossy, Dollarama CEO.
“With this acquisition, we have a unique and compelling opportunity to bring our differentiated value proposition to a new market which presents a clear path for growth through an established platform.”