Shares in Boohoo (BOO:AIM) bounced 11.8% to an all-time high of 374.3p on Thursday after the online fashion seller snapped up the remaining 34% of PrettyLittleThing (PLT) from minority shareholders for an initial £269.8m in cash and shares.
The PLT deal follows a turbulent few days for Boohoo, which has found itself in the crosshairs of short-seller Shadowfall.
Yesterday, Boohoo was forced to deny allegations from the hedge fund that it had overstated its cashflow and profits at the PLT subsidiary, among other claims.
FULL OF BOUNCE
Boohoo announced what it described as the ‘significantly earnings enhancing’ buyout of the remaining 34% stake in PLT from minority shareholders Umar Kamani, the son of Boohoo co-founder Mahmud Kamani, and Paul Papworth.
Consideration for the deal could potentially rise to £323.8m, although Boohoo said it 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’.
FORTRESS BALANCE SHEET
The AIM giant tapped shareholders for the best part of £200m earlier this month to bolster an already cash-rich balance sheet and help fund further acquisitions.
Following this latest deal, and with its growing platform of fashion brands including the eponymous Boohoo, Nasty Gal, MissPap, Karen Millen and Coast, Manchester-based Boohoo 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’ likely to emerge in the global fashion industry over the coming months.
Once the PLT buyout completes, Boohoo will have £350m of net cash. Since acquiring its initial 66% PLT stake in January 2017, the brand has grown significantly.
Boohoo today insisted PLT’s senior management team including Umar Kamani and Paul Papworth will remain in their current roles and continue focusing on developing PLT into a global brand.