Cake Box CEO Sukh Chamdal

Cake Box CEO Sukh Chamdal

Fresh cream cakes retailer Cake Box has rejected a 160p per share offer from an Australian asset management firm as “materially undervaluing” the company.

In a short statement to the London Stock Exchange today, the AIM-listed group said in response to a story by Sky News that it had received an unsolicited approach from River Capital, which owns The Cheesecake Shop.

An offer was made in early June and priced at 160p a share, which would have been a premium of around 30% to where the stock was trading at the time.

“The board unequivocally rejected the indicative approach as materially undervaluing the company and no further discussions with River Capital have taken place,” the group said in the statement.

“This announcement has been made without the consent of River Capital.”

Shares jumped 6% to 159p today as investors reacted to the Sky News story and Cake Box statement, but remain a long way short of the November 2021 peak of 404p.

Founded in London in 2008 by CEO Sukh Chamdal, Cake Box floated on the London Stock Exchange in 2018 at a price of 108p a share and a valuation of £43m.

However, the group was hit by an accounting scandal in 2022 after a number of errors were discovered, leading to the share price plummeting and co-founder and CFO Pardip Dass resigning.

Its most recent trading update in June showed revenues in the year ended 31 March rose 5.6% to £34.8m but EBITDA fell 24.3% to £6.7m and pre-tax profits were 28.6% lower than last year at £5.4m.

Chamdal remained bullish about the prospects in the coming year. “The market outlook is improving, our capabilities have been expanded, and the Cake Box brand is stronger than ever,” he said at the time.

Cake Box trades from more than 200 franchised stores across the country and also runs a number of kiosks inside Asda supermarkets.