Canada’s Dollarama Inc. has agreed to buy Australian discount retailer Reject Shop Ltd. in a deal pitched at a more than 100 per cent premium.
The A$259 million (US$163 million) offer values Reject Shop shares at A$6.68 each, more than double Wednesday’s closing price of A$3.15, the companies said Thursday.
Reject Shop shares surged as much as 111 per cent in early Sydney trading, the biggest gain on record.
Reject Shop is Australia’s largest discount retailer with more than 390 stores nationwide, selling a range of private-label and global branded goods, from Colgate toothpaste to homewares and pet food.
Dollarama has more than 1,600 outlets in Canada and owns a 60 per cent stake in Latin American discount retailer Dollarcity.
“We are excited about the opportunities that this transaction presents,” Reject Shop Chief Executive Officer Clinton Cahn said in the statement. “There is strong cultural alignment between our teams and we look forward to working alongside the Dollarama team.”
UBS Securities Australia Ltd. is advising Reject Shop and National Bank Financial Inc. is advising Dollarama.
Reject Shop’s largest shareholder, Kin Group, which owns a 20.8 per cent stake, intends to accept the offer.
Nasteho Said, Bloomberg News
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