Boohoo buys remaining £324m prettylittlething stake

Manchester-based online fashion giant Boohoo Group plc announced on Thursday it will pay up to £324 million in cash and stock to buy the remaining 34% of shares in prettylittlething.com it does not already own.

Boohoo said it is buying the stake from minority shareholders Umar Kamani and Paul Papworth for an initial £269.8 million, with the price potentially rising to £323.8 million.

“The acquisition is expected to be significantly earnings enhancing on a fully diluted basis with immediate effect,” said Boohoo.

Boohoo Group shares rose about 14% to around 382p to give the firm a current stock market value of about £4.4 billion. Boohoo’s shares have soared about 60% in the past year.

“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,” said Boohoo.

“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 £516 million of net sales in the year ending 29 February 2020 vs. £55 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 £45.2 million, and its adjusted after tax profit totalled £47.2 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 £86.0 million, with adjusted net income to shareholders of £69.9 million; the difference (£16.0 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.”

Boohoo said the acquisition is for an initial £269.8 million, with a further £54 million contingent on the group’s share price averaging 491 pence per share over a six month period between completion and a longstop date of March 14, 2024. 

PLT founder and CEO Umar Kamani said: “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.”

Boohoo Group CEO John Lyttle said: “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.”