The Nasdaq-listed retailer said at the start of the month it had made three proposals to Mothercare’s board with the last worth 300p a share, which valued the business at £266m.
However, these were rejected by Mothercare’s board. Alan Parker, chairman of the retailer, said at the time that proposals did not “reflect the inherent value of Mothercare to our shareholders or its prospects for recovery and growth”. Mothercare also refused to allow due diligence.
After the markets closed on Friday, Destination Maternity said that it was “withdrawing its proposal for a possible combination with Mothercare”. The company had a deadline of July 30 to either make a firm bid or walk away.
The American group said that its financial adviser, Bank of America Merrill Lynch, had canvassed the views of Mothercare’s shareholders and realised that they would only accept “a very significant increase in the value” of a proposal.
“In light of this and considering Destination Maternity has not been permitted by the Mothercare Board to conduct customary due diligence, Destination Maternity is unwilling to increase the value of its proposal and has therefore decided to withdraw its proposal.”
Destination Maternity is banned from making another approach of Mothercare for six months under UK Takeover Rules, unless it is invited back by the British retailer.
During the takeover process questions had been raised about whether Destination Maternity was able to finance a deal with Mothercare. However the company said that it had negotiated the terms of a financing package.