Country Casuals in cash-and-shares deal

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The Independent Online
COUNTRY CASUALS, the retailer of high quality women's clothing, yesterday swallowed up The House of Lerose, a women's wear designer, in an agreed cash-and-shares deal worth pounds 10.8m.

The deal surprised some analysts who pointed out that Lerose had shareholders' funds of pounds 13.9m, including pounds 9.3m in net cash.

However Charles Mullen, managing director of Lerose, who will join the board at Country Casuals, denied that the offer was too low.

'We don't consider it that way. This is a good deal for the House of Lerose. It is not trading profitably and this is a way of resolving the situation,' he said.

Lerose said yesterday it made pounds 1.6m before tax last year, down from pounds 3.6m in 1991. However it lost almost pounds 1m before interest and exceptional income. The dividend was unchanged at 10.3p.

Lerose's shares jumped from 141p to 186p after yesterday's offer. Country Casuals is offering nine shares and pounds 32.50 cash for every 25 Lerose shares, valuing each share at about 190p and estimating its issued share capital at around pounds 10.8m.

According to Mr Mullen, Country Casuals' expertise in direct retailing would benefit Lerose. 'The branding side needs to be expanded because that is the area that has slipped considerably in terms of turnover.

'If we tried to do that from a standing start it might jeopardise our cash resources and our employees,' he explained.

Country Casuals also announced a 28 per cent increase in pre-tax profits to pounds 2.6m for the year to 23 January 1993 - its maiden results as a public company.

Earnings per share rose by 10 per cent to 10.64p. After omitting the interim dividend, it is paying a final of dividend of 2.7p. Its shares closed down 2p at 167p.