Norwegian retailer XXL ASA's board of directors has recommended its shareholders against accepting a buyout offer from Britain's Frasers, saying that it did not reflect the company's long-term earnings potential.
In March, Frasers said it planned to make a mandatory offer for the retailer, just weeks after dropping its bid to buy equity it did not already own in the company.
The XXL ASA's board of directors said that the offer does not entail a sufficient premium relative to the current value range of its shares.
The board also noted that the relatively low absolute and relative free float of XXL's shares may limit the reliability of market prices as a clear indicator of the company's underlying value.
Frasers had been allocated 21.6 million A-shares in XXL's rights issue, and an additional 777,289 A-shares as compensation for the group's guarantee in the issue, XXL said in March, bringing Frasers' total stake to about 32.9% of all shares and 40.8% of the voting A-shares.
Frasers, which previously held a 25.8% stake in XXL, launched a bid in December but dropped it two months later, saying that several of XXL's other large shareholders would not accept the offer.
