Boohoo Group’s £55m Acquisition of Debenhams

By Hannah Farrell, Liam Smith, Liam Ryan and Erika Goodwin (Trinity College, Dublin), and Hirishika Rajasekaran, Vinay Naik, Luc Roberts (University of Warwick)

 

Overview of the deal


Acquirer: Boohoo Group

Target: Debenhams

Implied Equity Value: NA

Total Transaction Size: £55m

Closed date: 25th Jan 2021

Target advisor: NA


Online-retailer Boohoo has acquired the established Debenhams brand for £55 million. The acquisition includes Debenhams’ intellectual property, but will result in the closure of 124 department stores, leaving a potential 12,000 jobs at risk. The deal will expand Boohoo’s target audience significantly by introducing higher pricing into their clothing brands, for which it is not otherwise generally known. Boohoo adds Debenhams, one of the top 10 UK retail websites, to its vast portfolio of brands which receive more than 300 million visits a year. Debenhams went into their second administration in April of last year, struggling to keep their high physical store costs down. This deal emphasises the dynamic consolidation currently occurring within the sector, with rival ASOS acquiring some of Arcadia’s most reputable brands in early February of this year, including Topshop and Miss Selfridge. Both rivals have been prioritising synergies in recent years in order to become the dominant industry leader.

“The key is to have the right products,” - John Lyttle, Chief Executive Officer of Boohoo

Company Details: (Acquirer - Boohoo)


Boohoo Group plc is a leading online fashion retailer which designs, sources, and sells clothing, accessories, and beauty products. The company has experienced significant and explosive growth in recent years, with its revenue increasing by an average of 63% per annum since 2017. Alongside its core Boohoo and BoohooMAN brands, the company’s portfolio includes PrettyLittleThing, Nasty Gal, MissPap, Karen Millen, Oasis, Warehouse, and Coast.


Founded in 2006, headquartered in Manchester, UK

CEO: John Lyttle (15th March 2019 - Present)

Number of employees: 2,352 (as of 2019)

Market Cap: £4.602B (as of 05/02/2021)

EV: £4.13B

LTM Revenue: £1.49B

LTM EBITDA: £131.9M

LTM EV/Revenue: 2.78x

LTM EV/EBITDA: 31.29x


Company Details: (Target - Debenhams)


Debenhams Retail Limited is one of the UK’s longest operating clothing and goods retailers, with over 250 department stores in 18 countries during its prime era of business operation. The company has historically held a top-five market share in the UK for both womenswear and menswear, and operates a popular online platform with over 300 million visits per annum. Unfortunately, the retail chain is already in the process of closing down, after its administrators failed to secure a rescue deal to salvage the business alongside the remaining 124 stores it held as of last year. Its brands include Maine New England, J for Jasper, Mantaray, and Principles.