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U.K.’s Mothercare rejects Destination Maternity merger offers

BY Dan Berthiaume

Philadelphia – U.K. specialty maternity retailer Mothercare Plc has rejected two non-binding written merger proposals from Destination Maternity Corp. In a press release, Destination Maternity said its second proposal, delivered June 1 2014, would combine the two companies under a new U.K. holding company which would be listed in the U.S., for a total payment of $453 million to Mothercare shareholders.

Destination Maternity said specific advantages from its merger offer include creating a global leader in maternity, baby and young children’s apparel and products with more than 4,300 global stores and $2.5 billion in global network retail sales, utilization of excess Mothercare U.K. retail space to establish stand-alone Destination Maternity stores, and leverage of Mothercare’s direct and online expertise to enhance Destination Maternity’s multichannel offering.

In response, Mothercare said the Destination Maternity offer significantly undervalued the company, did not address material concerns regarding deliverability of value, and poses risks in its structure and with tax inversion.

“We believe there is a compelling strategic rationale for a combination of Destination Maternity and Mothercare, which would create the undisputed global leader in maternity, baby and young children’s apparel and products,” said Ed Krell, CEO and a director of Destination Maternity. “Mothercare and Destination Maternity are highly complementary businesses, with strong and trusted brands in their respective markets. Together, a combined company would provide a global platform to expand both Destination Maternity’s maternity apparel business and Mothercare’s baby and children’s business."

Destination Maternity did not mention taxes in its press release, but the U.K. corporate tax rate is scheduled to drop to 20% in 2014, while the U.S. corporate tax rate is currently 38%. The company said it may alter or withdraw the deal at any time. Destination Maternity is being advised by Bank of America Merrill Lynch and Skadden, Arps, Slate, Meagher & Flom LLP.

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Report: SEC investigating data breach at Target and several other companies

BY Dan Berthiaume

Minneapolis – The Securities and Exchange Commission (SEC) is reportedly investigating whether Target Corp. adequately protected its data and informed shareholders about the possible consequences relating to its fall 2013 data breach, according to Bloomberg. The report said that Target is one of several public companies that suffered a data breach which is being investigated by the SEC.

In May 2014, Target publicly stated that the SEC, along with the FTC and states’ attorneys general, were investigating its data breach, although the SEC has not publicly commented on any investigation. The SEC is examining whether Target properly handled its data and fully disclosed the breach once it was discovered.

In guidance released in 2011, the SEC advised public companies that cyber attacks can be material to investors if they cause security spending to significantly rise or result in theft of intellectual property.

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Tim Hortons, CIBC launch technology-enhanced Visa card

BY Dan Berthiaume

Toronto – Tim Hortons and Canadian Imperial Bank of Commerce (CIBC) are launching the new CIBC Tim Hortons Double Double Visa Card, leveraging a two-button technology that allows cardholders to press the CIBC Visa button on the front of the card to pay for their purchases anywhere Visa is accepted. One percent of each dollar spent is converted instantly into Tim Cash rewards, and by touching the Tim Card button, cardholders can then redeem their Tim Cash loyalty points at Tim Hortons locations.

Each button on the CIBC Tim Hortons Double Double Visa Card has its own colored light that illuminates when the cardholder chooses either the Visa or Tim Card option. The new card also offers Visa PayWave contactless payment capability and chip-and-PIN security technology.

The technology underpinning the new card leverages patented technologies developed by Dynamics. CIBC and Tim Hortons are the first to offer this technology to the Canadian marketplace. CIBC is the exclusive Canadian provider, and Tim Hortons is an exclusive provider in the quick service restaurant category in Canada.

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