Kathmandu sues biggest shareholder Briscoes for costs of failed takeover

David Kirk, Kathmandu chairman (left) and Rod Duke, Briscoe Group boss and Kathmandu shareholder. Photo / Natalie Slade, NZPA

Kathmandu Holdings is suing its biggest shareholder, Briscoe Group, in an effort to recoup what it spent fending off the rival retailer's failed takeover attempt.

The Christchurch-based outdoor equipment chain has filed a claim in the High Court to claw back $2.7 million and A$446,000 of expenses racked up when it fended off Briscoe's hostile takeover, it said in a statement. Kathmandu sought a payment in November last year, and Briscoe paid $638,000 without prejudice to its position on May 25 of this year.

"Kathmandu considers the full amount claimed is recoverable and has issued legal proceedings for the balance of monies owed," it said.

The Takeovers Code allows for a target company to recover as a due debt "any expenses properly incurred by the target company in relation to an offer or a takeover notice", while directors of a target company are entitled to have any properly incurred expenses refunded by the target company.

Briscoe built up a near-20 percent stake in Kathmandu ahead of its theoretical cash-and-scrip offer price of $1.80 a share made in the middle of last year.

Kathmandu shares recently traded at $1.50 and have dropped 3.9 percent this year, while Briscoe shares were recently at $3.05 and had gained 6.3 percent this year.

Briscoe offered 20 cents cash and five of its own shares for every nine Kathmandu shares, an offer which was rejected by the outdoor equipment chain's board as being inadequate and undervaluing the company.

Managing director and majority owner Rod Duke has said he's open to revisiting a takeover bid.