Boohoo, a leading online fashion retailer, has solidified its position in the fashion industry by acquiring the remaining 34% stake in PrettyLittleThing (PLT) for a staggering £269.8 million. However, the total cost of the acquisition could rise even higher, reaching £323.8 million, depending on the performance of Boohoo’s share price. Despite the significant investment, Boohoo expects the acquisition to immediately boost its earnings and prove highly profitable. This move aligns with Boohoo’s larger strategy to establish itself as a dominant force in the global fashion e-commerce market.

Looking beyond the PLT acquisition, Boohoo has ambitious plans to penetrate international markets while maintaining a strong financial foundation. The company aims to capitalize on potential merger and acquisition opportunities within the fashion industry in the coming months. Boohoo initially acquired a 66% stake in PLT in January 2017, a decision that has proven to be wise given the impressive growth of the brand. In fact, PLT’s net sales skyrocketed from £55 million at the time of Boohoo’s first investment to an astounding £516 million by February 29 of this year. Furthermore, PLT remains profitable, boasting a statutory after-tax profit of £45.2 million in its most recent fiscal year.

While Boohoo now enjoys full ownership of PLT, the management and leadership of the brand will remain intact. Umar Kamani and Paul Papworth, senior leaders of PLT, will continue to guide the brand’s development and cement its status as a global powerhouse. The acquisition itself was a combination of cash and shares. Boohoo initially paid £161.9 million in upfront cash from its net cash balance of £240.7 million as of February 29. With additional funding secured, Boohoo now boasts a substantial net cash balance of over £350 million, which will be instrumental in supporting its day-to-day operations and facilitating future acquisitions.

It is worth noting that Boohoo’s acquisition of PLT directly follows a period of scrutiny for the company’s shares. A short-seller raised concerns about the potential dilution of existing shareholders’ holdings due to the acquisition. However, Boohoo has clarified that the shares involved in the transaction account for only 3.9% of the company’s overall issued share capital.

(Useful links: Boohoo, PrettyLittleThing)