Latest / What the Flux / The Reject Shop's whopping acquisition offers l | Jeanwest enters administration | AustralianSuper walks away from WiseTech

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The Reject Shop's whopping acquisition offers l | Jeanwest enters administration | AustralianSuper walks away from WiseTech · What the Flux

• 0:05
  Speaker 1: This is what the Flux I'm Brett and I'm Justin
• 0:07
  Speaker 1: and it's Friday.
• 0:08
  Speaker 2: At twenty eighth the March, doesy Boy.
• 0:10
  Speaker 1: Despite the hblec's lengthy investigation, the average basket of groceries
• 0:14
  Speaker 1: is now costing more at Woolies than it was one
• 0:17
  Speaker 1: year ago, while the price has fallen at both Coals
• 0:20
  Speaker 1: and Outy Interesting and this could be part of the
• 0:22
  Speaker 1: reason why Wooly's share price is down more than twelve
• 0:25
  Speaker 1: percent just for the last six months.
• 0:27
  Speaker 2: Very juicy be man. You raise a very good point
• 0:29
  Speaker 2: and you are sharp with all the latest business news.
• 0:31
  Speaker 2: So flex am today in the Flux app will be
• 0:33
  Speaker 2: dropping quick sticks and if you're the fastest person to
• 0:35
  Speaker 2: answer all three questions correctly, you'll win fifty bucks and
• 0:39
  Speaker 2: a huge ego boost as well. To make sure to
• 0:41
  Speaker 2: download the Flux app and turn on your notifications to
• 0:43
  Speaker 2: win at Money Today.
• 0:44
  Speaker 1: Three arrogant stories today, Dozy Boy, let's do it for
• 0:48
  Speaker 1: our first. The Reject Shop has seen at share price
• 0:51
  Speaker 1: skyrocket one hundred and ten percent after an acquisition offer
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  Speaker 1: from Canadian retail giant Dollar Ama.
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  Speaker 2: Talk about going from reject to glow up b man,
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  Speaker 2: So tell me what is going on here well.
• 1:01
  Speaker 1: The Reject Shop was founded in nineteen seventy nine with
• 1:04
  Speaker 1: the plan to sell discontinued lines of products and factory rejects.
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  Speaker 2: And that's where it got its name, the reject Shop.
• 1:10
  Speaker 1: But juzzy boy. Over the years, it's become a lot
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  Speaker 1: more than just rejects, and it has still maintained its
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  Speaker 1: focus on being cheap. Everything from food to naxt to
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  Speaker 1: party things to health, cleaning supplies and storage. B Man,
• 1:20
  Speaker 1: you name it, reject shops.
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  Speaker 2: Got it.
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  Speaker 1: It floated on the ASX in nineteen ninety four.
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  Speaker 2: That be man at. The Reject Shop's gone through some
• 1:26
  Speaker 2: challenging times over the past decade as it tries to
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  Speaker 2: find its niche in the market.
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  Speaker 1: Particularly as kmart muscled into this space and more recently
• 1:34
  Speaker 1: she In and Timu as well. In fact, the Reject
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  Speaker 1: Shop share price is just twenty percent of its past
• 1:38
  Speaker 1: price that it was at in twenty thirteen.
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  Speaker 2: But now be Man Canadian retailer dollar Ama has made
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  Speaker 2: an offer to acquire the Reject Shop, the two hundred
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  Speaker 2: and fifty nine million.
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  Speaker 1: Dollars Canada's biggest retailer of items, for five dollars or less.
• 1:50
  Speaker 2: Essentially the maple syrup covered cousin of the Reject.
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  Speaker 1: Shop and Jazi Boy. This offer is a one hundred
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  Speaker 1: and twelve percent premium to its previous closing price.
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  Speaker 2: So man, it's no surprises here that the Reject Shop
• 2:02
  Speaker 2: encouraged shareholders to vote in.
• 2:03
  Speaker 1: Favor of the deal and Dollarrama would add the Reject
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  Speaker 1: Shop to its sixteen hundred discount retailers in Canada as
• 2:09
  Speaker 1: well as it's nearly six hundred discount stores in Columbia
• 2:12
  Speaker 1: or Salvador and Peru, because a global presence is the
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  Speaker 1: only way to compete in this new wide world of retail.
• 2:19
  Speaker 2: So what is the key learning here?
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  Speaker 1: Takeovers aren't just about money, They're often about scale and
• 2:23
  Speaker 1: plain old survival.
• 2:24
  Speaker 2: Regia Shop's been fighting a tough battle against online budget
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  Speaker 2: stores like she In and Timu and.
• 2:29
  Speaker 1: Does It Boy. It's been a challenge for the Reject
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  Speaker 1: Shop because online retailers like she In, they sidestep the
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  Speaker 1: traditional costs of physical stores.
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  Speaker 2: No rent, no wages, no electricity bills.
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  Speaker 1: And they offer ultra cheap products delivered two year door.
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  Speaker 1: And that's why it's so challenging for the Rejao Shop.
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  Speaker 1: For example, their net profit margin last year was just
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  Speaker 1: over three percent, and me Man, the Regia Shop couldn't
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  Speaker 1: match the scale and efficiency of the global giants. So
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  Speaker 1: these days bricks and mortar stores need scale and a
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  Speaker 1: strong global supply chain to survive.
• 2:57
  Speaker 2: Something that the Regia Shop didn't have by itself.
• 3:00
  Speaker 1: For our second story, Jean's West, the Aussie clothing retailer,
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  Speaker 1: has entered administration. With ninety stores to close and hundreds
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  Speaker 1: of jobs to be lost.
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  Speaker 2: Jean's West no longer fits best be Man, So what
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  Speaker 2: is going on here?
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  Speaker 1: Jeans West's first store opened in Perth in nineteen seventy two,
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  Speaker 1: and it grew to become an Aussie go to for
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  Speaker 1: denim and other clothing as well.
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  Speaker 2: Yeah, since it's humble Perth beginnings, Jeans Wes grew to
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  Speaker 2: nearly one hundred and fifty stores around Australia by twenty twenty.
• 3:25
  Speaker 1: But the retail industry just isn't the same as it
• 3:28
  Speaker 1: used to.
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  Speaker 2: Be and many retail brands have been feeling the economic heat.
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  Speaker 1: So now juzzy Boy Jean's West finds itself in a
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  Speaker 1: pickle tighter than freshly washed skinny jeans.
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  Speaker 2: It's entered administration with the plan to shut down all
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  Speaker 2: of its remaining ninety stores.
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  Speaker 1: And this isn't Jean West's first time under administration either.
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  Speaker 2: Huber Gardens has been trying their best to revive Jean's
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  Speaker 2: West over the past five years, but it.
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  Speaker 1: Wasn't to be. And now Jean's West will close all
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  Speaker 1: of its ninety.
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  Speaker 2: Stores, as well as up to six hundred jobs that
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  Speaker 2: will be lost.
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  Speaker 1: And when a business goes into administration, all of its
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  Speaker 1: creditors will be chasing debts. So what is the key
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  Speaker 1: learning here?
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  Speaker 2: When a business collapses, there's a very specific pecking order
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  Speaker 2: for who gets paid first.
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  Speaker 1: In this case, Jeans West has appointed picture partners who
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  Speaker 1: might try to restructure the finances and sell off some asset,
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  Speaker 1: but not everyone gets paid at the first instance.
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  Speaker 2: Nope, there's a strict order of business when it comes
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  Speaker 2: to debt repayments.
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  Speaker 1: Secured creditors they get paid first.
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  Speaker 2: Yeah, they're the ones who've got legal rights over the
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  Speaker 2: specific assets.
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  Speaker 1: Think of banks who have lent the business of money
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  Speaker 1: and taken property as a guarantee. Then you have preferential
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  Speaker 1: unsecured creditors. Usually employees will fall under this category. They'll
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  Speaker 1: get any of the remaining funds after the first group
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  Speaker 1: has been paid, next unsecured creditors.
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  Speaker 2: That's customers, contractors, suppliers.
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  Speaker 1: And the last one is the equity shareholders.
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  Speaker 2: Yep, so be Man Pitcher Partners is still crunching numbers
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  Speaker 2: to figure out how much money there is for all
• 4:46
  Speaker 2: of these different groups of creditors.
• 4:48
  Speaker 1: For our third and final story, Australian super has sold
• 4:51
  Speaker 1: its entire stake in tech giant wise tech Global after
• 4:54
  Speaker 1: serious concerns over the founder and board's conduct.
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  Speaker 2: The Australians people are walking with their wallets, be Man,
• 4:59
  Speaker 2: So what going on here?
• 5:00
  Speaker 1: Well? Wistech was founded in nineteen ninety four and specializes
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  Speaker 1: in logistics software that is actually used around the world.
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  Speaker 2: And over the past few years, wistech has made over
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  Speaker 2: forty acquisitions to grow into one of the biggest tech
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  Speaker 2: companies in Australia.
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  Speaker 1: And jasiboy wis Tech's founder Richard White. He still owns
• 5:17
  Speaker 1: thirty six percent of the company and.
• 5:18
  Speaker 2: You may remember being Man. Over the last few months,
• 5:20
  Speaker 2: there's been some serious allegations against Richard White, the founder.
• 5:23
  Speaker 1: Of Talking Undisclosed Relationships, conflicts of interest.
• 5:26
  Speaker 2: And be Man. Last month, four of their independent directors
• 5:29
  Speaker 2: resigned from the board.
• 5:30
  Speaker 1: And Australian Super is the largest super fund in Australia.
• 5:34
  Speaker 2: But without a certain number of independent directors. Australian Super said,
• 5:38
  Speaker 2: we are out.
• 5:39
  Speaker 1: Yeap sold in entire five hundred and eighty million dollar
• 5:42
  Speaker 1: steak due to these governance issues.
• 5:44
  Speaker 2: And be man, it ain't just Australian Super who's concerned.
• 5:46
  Speaker 1: Since the board resignations, wise, Tech shares have dropped around
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  Speaker 1: thirty percent.
• 5:50
  Speaker 2: Nothing like a bit of investor activism to get companies
• 5:53
  Speaker 2: to make changes.
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  Speaker 1: So interesting, So what is the key learning here?
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  Speaker 2: Investor activism is when investors use their equity stake to
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  Speaker 2: push for chain within a company.
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  Speaker 1: This includes pushing for better governance or better environmental or
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  Speaker 1: social initiatives.
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  Speaker 2: And even sometimes reshaping the leadership.
• 6:07
  Speaker 1: Now, in recent years superfunds they've become more vocal.
• 6:10
  Speaker 2: Yeah, they've attempts to use their big investments to influence
• 6:13
  Speaker 2: company behavior.
• 6:14
  Speaker 1: And Josey Boyd the Weis Tech case isn't the only
• 6:16
  Speaker 1: example of super funds trying to rally behind specific issues.
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  Speaker 2: For example, super funds like Australian Retirement trusts, SEABAS and
• 6:24
  Speaker 2: HESTA have all rallied together.
• 6:25
  Speaker 1: They warned that they may vote out men on boards
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  Speaker 1: if women don't occupy a minimum of thirty percent of
• 6:31
  Speaker 1: company board seats.
• 6:32
  Speaker 2: Interestingly, other super funds like Hest and Aware super are
• 6:35
  Speaker 2: choosing to stay invested in Wistech.
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  Speaker 1: They claim this is so that they can do their
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  Speaker 1: activism from within the company.
• 6:41
  Speaker 2: As an investor, Sam, if you want to start the
• 6:42
  Speaker 2: weekend with fifty bucks in your pocket, there is only
• 6:45
  Speaker 2: one place to go, the Flux app with your notifications on,
• 6:47
  Speaker 2: and be the first to answer three business questions correctly.
• 6:50
  Speaker 1: Thanks for listening and we'll see you on Monday.