TIDMBOO
RNS Number : 1928O
boohoo group plc
28 May 2020
The information contained within this announcement is deemed by
the company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
For Immediate Release 28 May 2020
boohoo group plc
("boohoo" or "the Group")
Acquisition of remaining 34% minority stake in
prettylittlething.com Limited
boohoo (AIM: BOO), a leading online fashion group, is pleased to
announce the acquisition of the remaining 34% of shares in
prettylittlething.com Limited ("PLT") from its minority
shareholders (Umar Kamani and Paul Papworth) for an initial
consideration of GBP269.8 million, potentially rising to GBP323.8
million. The acquisition is expected to be significantly earnings
enhancing on a fully diluted basis with immediate effect.
Transaction rationale and financial impact
By acquiring the remaining 34% stake in PLT today, the Group is
taking an important further step towards achieving its vision to
lead the fashion e-commerce market globally by accelerating full
ownership of a brand that is in high growth with enormous growth
potential ahead of it, in a transaction that creates significant
value for the Group's shareholders. After this acquisition and with
its growing platform of wholly owned, innovative fashion brands,
the Group believes it can continue to successfully disrupt the
international markets it operates in today, whilst retaining a
strong balance sheet in order to take advantage of numerous M&A
opportunities that are likely to emerge in the global fashion
industry over the coming months.
Since the Group acquired its initial 66% stake in PLT on 3
January 2017, the brand has gone from strength to strength as part
of the Group's multi-brand platform; generating GBP516 million of
net sales in the year ending 29 February 2020 vs. GBP55 million in
the year ending 28 February 2017, which represents a CAGR of 111%
in this timeframe. In the last financial year, PLT's statutory
after tax profit totalled GBP45.2 million, and its adjusted after
tax profit totalled GBP47.2 million. The Group intends the senior
management team at PLT, including Umar Kamani and Paul Papworth, to
remain in their current roles and continue focusing on developing
PLT into a global brand.
In the Group's most recent financial year ending 29 February
2020, it generated an adjusted after tax profit of GBP86.0 million,
with Adjusted Net Income to Shareholders of GBP69.9 million; the
difference (GBP16.0 million) being the minority shareholders' 34%
interest in the adjusted after tax profits of PLT. Going forwards,
this figure will be fully consolidated from the date of completion,
and as a result, the group expects the acquisition to be
significantly earnings enhancing on a fully diluted basis with
immediate effect.
Transaction structure
The acquisition is for an initial consideration of GBP269.8
million, with a further GBP54.0m of consideration contingent on the
Group's share price averaging 491 pence per share over a 6 month
period between completion and a longstop date of 14 March 2024.
The initial consideration is to be settled through a combination
of shares in the Group totalling GBP107.9 million and an up-front
cash payment of GBP161.9 million, funded from the GBP240.7 million
of net cash that the Group had on its balance sheet at 29 February
2020. Since its financial year end the Group has remained cash
generative, and immediately following completion of the acquisition
will retain over GBP350m of net cash; leaving it well-positioned to
take advantage of future investment opportunities. The shares
element of the consideration will be satisfied as outlined
below:
-- By the immediate issue of 16,112,331 Ordinary Shares in
boohoo group plc representing GBP54.0 million, subject to a lock-up
period of 18 months from the date of completion (based on the
closing middle market quotation on 27 May 2020);
-- By a further immediate issue of 16,112,331 Ordinary Shares in
boohoo group plc representing GBP54.0 million, subject to a lock-up
period of 24 months from the date of completion (based on the
closing middle market quotation on 27 May 2020); and
-- And by further contingent consideration of a further
16,112,331 Ordinary Shares in boohoo group plc, representing
GBP54.0 million, that are to be issued subject to the Group's share
price averaging 491 pence per share over a 6 month period up until
a longstop date of 14 March 2024. If this condition is not met, the
consideration will lapse.
The maximum total number of shares used for consideration in the
transaction is 48,336,993, representing 3.9% of the group's issued
share capital. Application has been made for 32,224,662 New
Ordinary Shares to be admitted to trading on AIM at 8.00 a.m. on 2
June 2020 ("Admission").
Transaction process
Since the Group initially acquired its majority stake three
years ago, the board has constantly reviewed and appraised PLT's
future prospects, and the potential purchase price required in
order to complete the buyout of the minority shareholding in PLT at
any point in time.
The transaction is defined as a significant transaction under
the AIM Rules. In addition, given the transaction is with a
relative of the Executive Chairman, the Group has taken the
following steps to ensure it represents fair value for the Group's
shareholders:
-- Set up an independent board committee comprising members of
the Group's Executive (Neil Catto and John Lyttle) and
Non-Executive Directors (Brian Small, Iain McDonald and Pierre
Cuilleret) to negotiate and manage the transaction;
-- Engaged with KPMG to appraise the transaction structure and valuation; and
-- The independent Board committee has sought advice from Zeus
Capital in its capacity as NOMAD to satisfy itself that the
transaction has been conducted at arm's length and is in the best
interests for boohoo group plc shareholders.
Upon completion of these steps, the members of the independent
board committee are of the opinion that the acquisition is one that
immediately creates significant value for the Group's shareholders;
at a valuation that is deemed to be fair for all parties; factors
in a material valuation discount for the minority stake; and
supported by the valuation work performed by KPMG.
Umar Kamani, Founder & CEO of PLT commented:
"This deal represents another milestone in our journey at PLT.
Since being a disruptive start-up in 2012 to a global fashion brand
that generates over half a billion pounds in sales today, I am
incredibly proud of what my team and I have achieved in such a
short period of time. The team and myself have big ambitions for
the brand, and I'm incredibly excited about what the future holds
for PLT as it embarks on the next stage of its global journey as a
fully-owned part of the boohoo group."
John Lyttle, Group CEO commented:
"We are delighted to be acquiring the remaining 34% stake in
PLT. It has been a brand that has delivered strong growth as part
of the boohoo group's platform, and has a great future ahead of it
in the UK and overseas. I look forward to building on the great
working relationship with Umar and the senior team at PLT as the
Group continues to move forwards with its multi-brand strategy as
part of its vision to lead the fashion e-commerce market
globally."
Total Voting Rights
Following Admission, the total number of Ordinary Shares and
voting rights in the Company will be 1,258,899,050. The Company
does not hold any shares in treasury. The above figure may be used
by Shareholders as the denominator for the calculations by which
they will determine if they are required to notify their interest
in, or a change to their interest in, the share capital of the
Company under the FCA's Disclosure Rules and Transparency Guidance
and the articles of association of the Company.
-ends-
Enquiries
boohoo group plc
Neil Catto, Chief Financial Officer Tel: +44 (0)161 233
2050
Alistair Davies, Investor Relations Tel: +44 (0)161 233
2050
Clara Melia, Investor Relations Tel: +44 (0)20 3289
5520
Zeus Capital - Nominated adviser and joint
broker
Nick Cowles/Andrew Jones (Corporate Finance) Tel: +44 (0)161 831
1512
John Goold/Benjamin Robertson (Corporate Tel: +44 (0)20 3829
Broking) 5000
Jefferies - Joint broker
Philip Noblet/Max Jones Tel: +44 (0)20 7029
8000
Buchanan - Financial PR adviser boohoo@buchanan.uk.com
Richard Oldworth/ Kim Looringh-van Beeck/Toto Tel: +44 (0)20 7466
Berger 5000
About boohoo group plc
"Leading the fashion eCommerce market"
Founded in Manchester in 2006, boohoo is an inclusive and
innovative brand targeting young, value-orientated customers. Since
2006, boohoo has been pushing boundaries to bring its customers
up-to-date and inspirational fashion, 24/7. boohoo has grown
rapidly in the UK and internationally, expanding its offering with
range extensions into menswear, through boohooMAN.
In early 2017 the group extended its customer offering through
the acquisitions of the vibrant fashion brand PrettyLittleThing,
and free-thinking brand Nasty Gal. In March 2019 the group acquired
the MissPap brand and in August 2019, the Karen Millen and Coast
brands, all complementary to the group's scalable multi-brand
platform. United by a shared customer value proposition, our brands
design, source, market and sell great quality clothes, shoes and
accessories at unbeatable prices. These investment propositions
have helped us grow from a single brand, into a major multi-brand
online retailer, leading the fashion eCommerce market for 16 to
40-year-olds around the world. As at 29 February 2020, the boohoo
group had around 14 million active customers across all its brands
around the world.
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END
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