28th May 2020 10:11
(Alliance News) - Online clothing retailer boohoo Group PLC on Thursday said it has bought the remaining stake in PrettyLittleThing from the co-founder's son, a day after defending itself over the issue against a short seller.
boohoo said it is buying the remaining 34% stake in PrettyLittleThing from minority shareholders Umar Kamani and Paul Papworth for an initial consideration of GBP269.8 million, potentially rising to GBP323.8 million including a potential further contingent payout of GBP54 million.
The initial GBP269.8 million consideration will be settled through a combination of shares in boohoo 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 company had on its balance sheet at February 29.
The share element of the initial consideration will be satisfied through the issue of 32.2 million bohoo shares.
The additional GBP54 million payment, to be made through a 16.1 million share issue, is contingent on the company's share price averaging 491 pence per share over a six-month period between completion and a longstop date of March 14, 2024.
boohoo shares were up 14% at 382.10 pence each in London on Thursday morning.
"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.
boohoo bought a 66% stake in PrettyLittleThing for GBP3.3 million in 2016 and had the option to buy the remaining stake in 2022.
boohoo's purchase comes a just a day after it "strongly" refuted allegations made by short seller ShadowFall.
ShadowFall claimed boohoo has provided "a misleading impression" of its free cash flow.
"We see a risk that BOO doesn't use its recent cash call for mergers & acquisitions, but instead combines it with its considerable GBP241 million net cash, to be paid to BOO's chair's son, through material dividends and a potential PrettyLittleThing [non-controlling interest] buy-out," the short seller also alleged.
The chief executive and founder of PrettyLittleThing is Umar Kamani, son of boohoo Chair & co-founder Mahmud Kamani.
By Tapan Panchal; [email protected]
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