British home shopping firm Findel PLC (LON:FDL) said its second largest shareholder has backed its rejection of a takeover bid from Sports Direct International PLC (LON:SPD).
Schroders Investment Management Ltd, which owns 18.85% of Findel, has sent a letter of support to the retailer for its decision to turn down Sports Direct’s £139.2mln offer.
In the letter, Schroders said it agrees with Findel’s view that the 161p per share cash offer “significantly undervalues the future prospects” of the business, according to Findel.
READ: Findel urges shareholders to reject takeover bid from Mike Ashley's Sports Direct
Findel said Schroders confirmed that it remains supportive of the “operational and financial progress” the group has made under the leadership of chief executive, Phil Maudsley, and chief financial officer, Stuart Caldwell.
“We are grateful for the support of our second largest shareholder in Schroders, and continue to recommend strongly that all other shareholders take no action in respect of the offer from Sports Direct,” Findel’s chairman Ian Burke said.
Shares in Findel rose 1.4% to 160.25p in afternoon trading.
Sports Direct, whose founder and chief executive is Mike Ashley, was forced to make a buyout offer last month after its stake in Findel exceeded 30%.
Sports Direct takeover bid 'opportunistic'
Last week, Findel urged shareholders to reject the deal, saying it believed the offer was “opportunistic”.
The group said the bid represented a big discount to fair value, to the undisturbed share price of 250p and to analysts' target prices that range from 300p to 350p.
Findel also argued that control by Sports Direct would lead to an 8.8% dilution in the value of its shares.
Findel sells some of Sports Direct’s products through its Studio business, which used to be known as Express Gifts.
Sports Direct on retail acquisition spree
Sports Direct has been on an acquisition spending spree by snapping up struggling retailers such as House of Fraser and Evans Cycles.
Ashley has said he was also considering buying Debenhams PLC but only if the department store cancelled a £200mln refinancing plan and made him chief executive.
Debenhams pushed ahead with the refinancing on Friday after securing the backing of bondholders, saying any offer from Sports Direct would not address its immediate funding needs.
READ: Sports Direct's Mike Ashley accelerates calls to become Debenhams boss after receiving ultimatum
Of the £200mln funding secured, only half has become available immediately. The rest will be released depending on whether Sports Direct launches a firm takeover offer for Debenhams or agrees on the provision of at least £200mln in new funds via a loan or participation in a rights issue.
The put up or shut up ultimatum prompted Ashley on Monday to repeat calls for shareholders to back his demand to become chief executive of Debenhams. He made no mention of whether he is still weighing up a takeover bid.