THE REJECT SHOP ENTERS INTO BINDING SCHEME IMPLEMENTATION
AGREEMENT WITH DOLLARAMA
The document is a comprehensive Scheme Implementation Agreement dated March 27, 2025, detailing Dollarama Inc.’s proposed acquisition of The Reject Shop Limited. Here are the key elements:
Transaction Overview
- Acquisition Price: A$6.68 cash per share, representing a 112% premium to the closing share price of A$3.15 on March 26, 2025
- Total Equity Value: Approximately A$259 million
- Structure: Acquisition via a court-approved scheme of arrangement
- Special Dividend: The Reject Shop Board intends to determine a fully franked special dividend of up to A$0.77 per share, which would be deducted from the scheme consideration
- Franking Credits: Eligible shareholders may benefit from franking credits of up to A$0.33 per share
Key Parties
- Acquirer: Dollarama Inc., a Canadian value retailer with 1,601 locations in Canada and a 60.1% interest in Dollarcity (588 stores in Latin America)
- Target: The Reject Shop Limited, an ASX-listed discount retailer with over 390 store locations across Australia
Board Recommendation and Support
- The Reject Shop Board unanimously recommends shareholders vote in favor of the Scheme
- The largest shareholder, Kin Group (20.8%), has indicated its intention to vote in favor
Conditions and Timeline
- Shareholder approval at the Scheme Meeting (expected June 2025)
- Court approval
- Independent Expert concluding the Scheme is in the best interests of shareholders
- No Material Adverse Change or Prescribed Occurrences
- Implementation expected in the second half of 2025
Deal Protection
- Customary exclusivity provisions including no-shop, no-talk, and no due diligence obligations
- Notification obligations and matching rights
- Break fee of approximately A$2.6 million (1% of equity value) payable in certain circumstances
- Reverse break fee of the same amount payable by Dollarama in certain circumstances
Strategic Rationale
- Opportunity for Dollarama to expand into a new geographic market
- Platform for growth through an established retail network
- Complementary business models with aligned value retail focus
- Opportunity to leverage Dollarama’s merchandising, sourcing, and operational expertise
Corporate Governance Post-Implementation
- Upon implementation, Dollarama will appoint directors to The Reject Shop Board
- Provisions for directors’ and officers’ insurance for The Reject Shop’s current leadership
The agreement includes detailed provisions regarding implementation steps, conduct of business during the interim period, representations and warranties, and termination rights, along with annexures containing the Scheme and Deed Poll documents.
Property Requirements
- Store sizes range from 580-650sqm GLA
- Ideal store size rectangular 600sqm GLA with 14 metre frontage
- Co-located with everyday retailers – supermarket, pharmacy, food.
- Multiple signage locations required
- Stores to be located for all Australians to access easily
Type of Real Estate
- Freestanding, Neighbourhood and Sub-Regional Centres
- Metropolitan and Regional locations
- Strong retail precinct, easy access and parking
- Shopping Centres with high traffic numbers
- Prominent signage on building, in-centre and pylons Stores to have rear loading for rigid vehicle access.
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