As predicted by brokers, Briscoe's Rod Duke's $362million offer, of five Briscoe shares for every nine of Kathmandu, plus 20c per share, would be rejected by Kathmandu's board, speculating the implied $1.80 offer would require a larger cash-component.
Kathmandu chairman David Kirk told shareholders the offer did not reflect Kathmandu's future growth plans, including recent investment in core systems and opportunities to drive sales, which would begin to show benefits in 2016.
''The offer has been timed to exploit recent weakness in Kathmandu's share price and an isolated period of challenging trading conditions,'' Mr Kirk said.
Kathmandu shares were 46% down on a year ago, still trailing the implied $1.80 offer yesterday, but up slightly after the rejection announcement, at $1.74.
Kathmandu's directors unanimously recommended to shareholders yesterday they reject the offer, saying it was ''inadequate'', ''highly opportunistic'' and did not reflect the underlying value of Kathmandu.
''Briscoe can afford to offer a lot more for your shares,'' the directors said.
Craigs Investment Partners broker Chris Timms said given the slight increase in share price yesterday, the market was taking a ''wait and see approach''.
''The ball is back in Briscoe's court, to make a decision on where to next,'' he said.
He said the Briscoe offer was ''largely unattractive'' to many shareholders, being mostly offered in script, and Briscoe had to decide whether to come back with an offer of more cash.
Kathmandu's depressed share price reflected an extended poor trading period, including unseasonal weather conditions, some lacklustre annual sales and subsequent off-loading of accumulated stock; further constraining profit margins.
Kathmandu also released financial guidance yesterday for the 2016 year, including an 11% gain in sales to $455million, a partial recovery in earnings before interest and tax to $48.2million from $33.7 million in 2015, and a widening profit margin of 10.6%, from 8.2%, BusinessDesk reported.
A report commissioned by Kathmandu from Grant Samual to assess Mr Duke's offer valued Kathmandu's shares in a range of $2.10 to $2.41, or 16%-33% above the $1.80.
In early July, Briscoe Group reached a 19.9% stake in Kathmandu and announced its conditional takeover offer to acquire 100% of Kathmandu, which has been in a trading downturn.
Mr Duke has a more than 78% stake in Briscoe Group
and, should the takeover go ahead, his stake would fall to 55% of the combined companies.
Kathmandu noted that unless there was an extension to the Briscoe offer, it would close on September 17.
