Online sporting goods retailer Netshoes (Cayman) Ltd. said June 3 that its board recommended against the proposed takeover by Brazilian retailer Grupo SBF SA and to instead approve Magazine Luiza SA's offer.
Netshoes scheduled an extraordinary shareholders meeting June 14 to vote on the plan.
Magazine Luiza first approached Netshoes with a $2 per-share offer, resulting in the signing of an agreement and plan of merger on April 29, which would have resulted in Magazine Luiza acquiring the Brazilian company for approximately $62 million.
However, SBF, which operates sports retailer Centauro, submitted an unsolicited bid to acquire the retailer for $2.80 per share, prompting Magazine Luiza to raise its offer to $3. SBF again tried to challenge Magazine Luiza's updated offer with a revised $3.50 per-share bid on May 28.
At the time, Netshoes postponed the scheduled May 30 meeting with its shareholders as it reviews the offer.
Most recently, Netshoes said its board, in consultation with its financial and legal advisers, concluded that SBF's proposal "does not provide sufficient assurances in relation to the company's financial condition or adequately address short-term liquidity concerns."
The company said SBF's proposal does not constitute a superior proposal under its merger terms with Magazine Luiza. It added that any potential transaction between Netshoes and SBF would require calling a new shareholders meeting and a review by Brazilian antitrust authorities, resulting in delay and uncertainty.
The deal with Magazine Luiza was already approved by the Brazilian antitrust authority May 22. Magazine Luiza will continue with its plan to acquire Netshoes for $3 per share, pending approval at the meeting. The transaction is expected to close within five days after the approval of the merger by Netshoes shareholders.