- Any bid to be all cash
- But Boohoo owns controlling stake
- Revolution shares down 95% since IPO
Mike Ashley’s Frasers (FRAS) has confirmed its participation in the sale process for cosmetics company Revolution Beauty (REVB:AIM), sending the latter’s share price up 5.5% to 8.3p and setting the stage for another dust up between Frasers and Boohoo (DEBS:AIM) in their quest to own the beauty brand.
Although Frasers holds 29% of Boohoo, which itself has a 27% majority stake in Revolution Beauty, Boohoo is unlikely to let its arch-rival swoop on the business without a fight.
In its latest stock market missive, Frasers said any bid for struggling Revolution Beauty would be all cash, although the Sports Direct-to-House of Frasers owner cautioned there can be ‘no certainty that an offer will be made’, nor on what terms might be attached to any bid.
Frasers is one of a number of potential suitors running the rule over cash-strapped Revolution Beauty, which recently reported ‘softer than planned’ March and April trading and whose CEO Lauren Brindley recently departed to take up a role at US beauty behemoth Ulta Beauty (ULTA:NASDAQ). The deadline for bids is set for 11 June.
BARGAIN HUNT
Frasers had already confirmed it is running the numbers on makeup and beauty products specialist Revolution Beauty, which put itself up for sale following a share price caused by poor trading, accounting probes and boardroom spats.
Revolution Beauty floated on the stockmarket in July 2021 at an issue price of 160p, valuing the company at almost £500 million, but the share price has collapsed by 95% to 7.9p, shrinking the market cap to a mere £25.3 million.
That slump has attracted the attentions of Frasers, which is constantly on the lookout for bargains and owns stakes in a slew of other retailers including ASOS (ASC), Currys (CURY), THG (THG) and Hugo Boss (BOSS:ETR).
DISASTROUS INVESTMENT
Led by CEO Michael Murray, Frasers continues to expand its presence across fashion, beauty and wellness, and clearly sees value in Revolution Beauty. The Sports Direct-to-Flannels-owner is no stranger to clashing with Debenhams owner Boohoo, having previously tried and failed to get founder Mike Ashley and restructuring expert Mike Lennon seats on the board of directors.
Revolution Beauty has so far proved to be a disastrous investment for Boohoo, having built up a stake at a much higher price than where it trades today. Boohoo can either hope to narrow some of its losses by someone like Frasers taking over the target at a chunky premium, or it can buy the business outright and attempt to turn Revolution Beauty around and claw back its losses over time.
