Godfrey’s co-founder looks to suck up every last shareholder with increased bid
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The biggest shareholder of vacuum seller Godfreys wants to suck up every last shareholder — upping its offer overnight in an attempt to take control of the company.
Arcade Finance — led by Godfreys 99-year-old co-founder John Johnston — increased its offer by 1.5c yesterday, a move that was supported by the company’s board.
Mr Johnston, who launched Godfreys in Melbourne in 1936 with Godfrey Cohen — wants to privatise the business.
Godfreys — which was known in the 1980s and 1990s for its loud TV ads (pictured above) — has been in trouble this year since reporting sharper lower earnings.
The company (ASX:GFY) reported a 27 per cent drop in like-for-like sales in April — which has pushed sales down by 7.8 per cent in the year-to-date.
The company blamed the changes in its television advertising — from a focus on its price to instead accentuating its product features, but it said customers just wanted the TV ads like they had always been.
“Arcade is concerned that the disappointing recent financial performance of Godfreys, and the lack of positive impact from the turnaround strategy, will damage Godfreys’ future business prospects.
“As such, Arcade is willing to offer improved terms in order to encourage a speedy completion of its offer and enable Arcade to control future business strategy and decision making.”
In the past month Arcade has already bought up an extra 10 per cent of the company in acceptances, but it said it was getting to crunch time.
“These changes have not resonated with Godfreys existing customer base and as such the Company has reverted to the previous television advertising approach for this segment of the market,” it said.
The company said it expected earnings to be in the realm of $3.5 million and could be even worse if sales continue on the same trajectory.
As such, it told the market it was poised to be in breach of its debt facility and could result in a default.
But Arcade says it could be the company’s saving grace – taking it to a private environment where a turnaround could be more easily serviced.