Naked Brand Group (NAKD) dressed sharply higher on Tuesday, closing up 19% on the day to $2.53 a share on volume that exceeded over 25X its average trading volume.
At the market open on Tuesday, NAKD put out a press release highlighting that they will be presenting at the upcoming 29th Annual Roth conference, with NAKD scheduled to present on Tuesday, March 14, 2017 at 4:30pm PDT. With no specific news as of yet to justify the spontaneous and robust interest, it may be safe to bet that investors are feeling optimistic that the previously announced merger between NAKD and Bendon may finally be ready to close, in line with previously announced guidance.
Sharp Move Higher
CNA Finance recently featured the NAKD/Bendon deal, highlighting the benefits from the planned merger, which is expected to close in the first quarter of 2017. The deal will bring a host of opportunity to NAKD, which will have enormous resources available to them from Bendon’s long established efficiencies, inclusive of Bendon’s distribution and operations platform.
Once the merger becomes official, Bendon’s global distribution and operations platform may turn out to be a boon for NAKD. As was recently reported, in January of 2017, NAKD entered into a Letter of Intent with Bendon Limited for a proposed merger of the two companies. Assuming the Merger Agreement is ratified by both boards, the parties expect to seek approval from NAKD shareholders during the first quarter of 2017, subject to SEC review.
Obviously, a merger with Bendon opens the door to tremendous growth and market opportunity for NAKD shareholders. However, shareholders should consider the opportunities a bonus, the real value is that NAKD shareholders will get a piece of Bendon, a 70 year old, well established company that can deliver long term, sustainable shareholder value.
What NAKD Shareholders Want
Without specific news published, speculation suggests that investors are quite confident that the deal will soon be consummated. For NAKD shareholders, they will get an interest in Bendon, an iconic worldwide brand that has delivered consistent and impressive performance over its 70 year history.
Bendon’s global brands include some of the most recognized lingerie brands in Australia, the USA, and the UK. And, it certainly never hurts to have an evergreen partnership in place with Heidi Klum, perhaps the industries most recognized and successful lingerie and swim wear model in the world.
On the financial side, Bendon has delivered consistent growth in revenue and earnings, with trailing twelve months revenue (ttm) of $119 million in 2016, and an impressive ttm gross margin of 50.3% of sales. Financial results are generated through a host of synergies, but the company’s highly efficient sourcing and logistics network, which provides market agility and economies of scale, acts as the primary bread winner for Bendon.
If the move in both share price and volume is an indication of good things to come for NAKD, investors may want to keep a close eye on the trading action during the next few sessions, as volume often precedes news price.
As always, CNA Finance will keep followers well apprised of all real time and breaking news for NAKD.
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[Image Courtesy of Max Pixel]