Join our community of smart investors

Boohoo buys PrettyLittleThing

The online retailer was subject to a short seller attack earlier this week
May 28, 2020

Boohoo (BOO) has agreed to take complete control of fashion retailer PrettyLittleThing, in a deal that could be worth up to £324m. Boohoo acquired a 66 per cent stake in PLT, which is headed by the son of Boohoo chairman Mahmud Kamani, in 2017.

IC TIP: Hold at 378p

PLT has grown exponentially since Boohoo’s entry into the business, posting net sales of £516m in the year ending 29 February 2020 compared with £55m in 2017. Boohoo had the option to acquire the remaining 34 per cent of PLT until February 2022 - had this expired, a dividend would have been paid out of PLT’s reserves to all PLT shareholders instead, including Boohoo.

The initial price for PLT stands at £270m, which will rise by £54m if Boohoo’s share price averages 491p per share over a six month period between the deal’s completion and a deadline of 14 March 2024. The announcement comes days after Boohoo was accused by short seller Shadowfall of flattering its free cash flow in its accounts, including its treatment of PLT’s FCF as if it owned 100 per cent of the company, rather than two-thirds.. Boohoo said that the report was “without merit”.