The online fashion retailer will pay an initial £269.8mln to the minority owners, being chief executive Mahmud Kamani’s son Umar Kamani and chief operating officer Paul Papworth, who are both continuing in their roles running the subsidiary.
Boohoo announced the acquisition just days after a report was issued by hedge fund ShadowFall that criticised the company’s accounting for PLT and estimated that it would cost around £1bn to buy out the minority stake.
An up-front cash payment of £161.9mln will be funded from the £240.7mln of net cash that the group had on its balance sheet at 29 February, meaning it will still retain over £350m of net cash post-transaction.
The remaining portion of the initial consideration is being paid in shares, of which half are issued with a lock-up period of 18 months and the other half for 24 months.
A further £54mln-worth of shares will be paid if the group’s share price averages 491p pence per share “over a six-month period between completion and a longstop date of 14 March 2024”. If this condition is not met, the consideration will lapse.
The AIM-listed company expects the acquisition to be significantly earnings enhancing on a fully diluted basis with immediate effect, having grown revenue 38% to £516mln in the year to 29 February, 42% of group sales, and generated a total post-tax profit of £86mln, of which the group’s portion was £69.9mln.
Boohoo shares, which had wobbled a little in recent days after the Shadowfall criticism, were up 18% to 394.4p by lunchtime on Thursday.
Analysts at broker Liberum said “This is a very shrewd and positive move by Boohoo’s management team that removes one of the major cloud’s that has hung over the equity story.”
–Adds shares and broker comment–