Kiwi retailer Briscoe has made a takeover bid for Kathmandu with the aim of creating an almost $1 billion Trans-Tasman conglomerate.
Briscoe, which has almost a 20 per cent stake in Kathmandu, wants to buy the remaining share capital through the issue of 89.7 million of its shares and payment of $NZ32.3 million ($A28.36 million) in cash.
The homewares retailer and parent company of Rebel Sport in New Zealand is offering Australian and NZ-based shareholders in Kathmandu five of its shares for every nine Kathmandu shares.
The company says its offer equates to $NZ1.80 (approximately $A1.58) per Kathmandu share and a cash payment of 20 NZ cents per Kathmandu share.
Briscoe's majority stakeholder and managing director Rob Duke said the acquisition would create an Australasian retail group with annual sales of more than $NZ900 million ($A790.24 million).
He said the company would have strong earnings potential with a more diverse product offering that would be able to compensate for seasonal trading patterns.
"We are really excited about the prospect of pulling these two companies together and building what will be a very powerful single group," he told AAP.
Mr Duke, who has a track record of turning companies around, including Briscoe, said he's confident of returning Kathmandu to its glory days.
He said he has been "keen on" Kathmandu for a long time and now was the right time to bring two strong brands together.
Shares in Kathmandu on the Australian stock market jumped more than 25 per cent on Tuesday to a three-month high of $1.57 on news of a potential takeover.
However, following the official offer on Wednesday Kathmandu's share price did not perform as well.
It finished four cents, or 2.55 per cent, lower at $1.53 despite broader market gains.
optionsXpress market analyst Ben Le Brun said the share price could be pulling back from the previous session's strong gains but it could also be a sign that there's doubt over the deal being accepted.
"The market looks concerned that the offer may be rejected by the company," he said.
Kathmandu is yet to respond to the offer.
The outdoor clothing and equipment retailer has struggled amid weak consumer sentiment and stiff competition in recent years, forcing it to downgrade profit forecasts.
The company slipped into the red in the first half of its 2014/15 fiscal year with a $NZ1.8 million loss.
