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Boohoo has announced the acquisition of the remaining 34% of shares in Pretty Little Thing (PLT) from minority shareholders, in a deal that could potentially rise to £323.8m.
News of the acquisition closely follows a recent share slide after a short-selling note, issued on 26 May, which alleged that the retailer overstated its cash flow and disclosed information that “could be deemed to be misleading”.
The online fashion retailer said that it “strongly refutes” any allegations of understating costs incurred by PLT, which would “thereby overstate its profitability”.
In its latest update, Boohoo said that the acquisition, which will see full ownership of the PLT brand, marks a step towards “achieving its vision to lead the fashion e-commerce market globally”, adding that PLT is in high growth with “enormous growth potential” ahead of it.
The retailer also spoke of its belief that it can “continue to successfully disrupt the international markets it operates in”, whilst retaining a strong balance sheet following the acquisition.
In addition, it outlined its plans to take advantage of “numerous” M&A opportunities that it believes are “likely” to emerge in the global fashion industry over the coming months.
Boohoo also intends to maintain the senior management team at PLT, which includes its previous minority shareholders, Umar Kamani and Paul Papworth, and said that on developing PLT into a global brand.
The group first acquired its initial stake of 66% in PLT on 3 January 2017, and has since “gone from strength to strength”. In the year ended 29 February 2020, the group generated £516m of net sales, against the £55m generated in the year ended 28 February 2017.
In its latest trading result, the fashion retailer generated a pre-profit of £92.2m, but added that the acquisition will be “significantly earnings enhancing” with immediate effect.
Umar Kamani, founder and CEO of PLT, 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.”
He added: “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.”
John Lyttle, group CEO, 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.”
