Background: Bapcor is a major Australian auto parts retailer that’s been around since 1971 and operates over 1,100 stores selling auto parts including Autobarn, Burson and Midas. Back in March this year, Bunnings announced plans to aggressively expand into auto parts across its 300 stores. At the time, Bapcor didn’t seem too phased by Bunnings stepping on their turf.

‍What happened: But now, Bapcor has warned of multiple hits all at once:

• Their retail sales have dropped 3.5% due to “competitor activity” (ie Bunnings)
• They suffered $6.4 million in write-offs from contract and supplier disputes
• They devalued inventory by nearly $11 million
  

‍What else: As if that wasn’t bad enough, three of the Bapcor directors dropped the mic and walked out. Next minute, Bapcor’s share price dropped 30%, dropping their market cap to just over $1.2 billion. That's a whole lot less than the $1.83 billion acquisition offer that they rejected in July 2024.

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What's the key learning?

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‍💡A rejected takeover bid can come back to haunt a board, especially when things take a turn for the worse. Last year, Bapcor’s board rejected a $1.83 billion bid from Bain Capital, arguing it undervalued the company. Fast forward, and the share price has tanked nearly 30%.

💡This isn't the only company to reject a takeover offer and suffer the consequences. In 2017, Premier Investments tried to acquire Myer, but Myer rejected the offer and tried to execute on its turnaround strategy alone. Now, Premier Investments have two board seats at Myer and they just sold their Apparel Brands portfolio to Myer for $900 million.

💡 So, it’s a reminder that when you reject a takeover offer, you need to prove that you can deliver more value independently.