MENU

Godfreys Group Ltd surges 42% on takeover bid

Cleaning appliances retailer Godfreys Group Ltd (ASX: GFY) has risen 42.86% to 30 cents in morning trade after receiving an off market takeover bid from its largest shareholder Arcade Finance Pty Ltd yesterday after the close of trade. Arcade is offering shareholders of Godfreys 32 cents cash for each share held, which represents a 52.4% premium to the company’s closing share price on April 6, the last trading day before the takeover bid was made.

Co-founder bid

Arcade currently has a 28.09% stake in Godfreys’ issued share capital and is the investment vehicle of John Johnston, who co-founded Godfreys with Godfrey Cohen in the 1930s. An associate company of Arcade, 1918 Finance Pty Ltd, is the lender of Godfreys $30 million secured debt facility. Arcade’s takeover offer is aimed at restoring Godfreys’ value and improving its financial performance as an unlisted private company. At this stage, the Board of Godfreys has recommended shareholders take no action to the takeover bid and will appoint an independent expert to determine whether the offer is fair and reasonable.

Foolish takeaway

It has been a tumultuous run for shareholders of Godfreys after it floated on the Australian market in December 2014 at $2.75 per share. The company’s stores have struggled amidst fierce competition from new online only retailers and large established retailers such as JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN). Consumers battling low wages growth and rising utility bills has also added to the difficulties confronting Godfreys over the last 12 months.

Godfreys’ latest earnings report for the December 2017 half year reaffirmed the difficulties the business is facing. Revenues fell by 8.9% to $84.2 million with comparable like for like sales down 6.2% over the prior period. The company’s margins also dropped by 250 basis points to 1.8%, which resulted in earnings before interest, tax, depreciation and amortisation decreasing 43.3% to $3.6 million. After posting a non-cash impairment of intangibles and other assets of $75.2 million, the company’s net loss after tax blew out to $58.6 million.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool Contributor Tim Katavic has no financial interest in any company mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!