- Maternity wear brand to go private in £15.3 million takeover
- Share price has collapsed on a string of profit warnings
- Mayfair Equity Partners sees better future for Seraphine away from stock market
Bombed-out shares in Seraphine (BUMP) surged almost 200% higher to 29.1p after the posh maternity-to-nursing wear brand recommended a £15.3 million takeover offer from its biggest shareholder, Mayfair Equity Partners, which is likely to see the company leave the stock market.
Pitched at 30p per share in cash, the offer price represents a 206% premium to yesterday’s (19 January 2023) 9.8p close, though it is a massive discount to Seraphine’s July 2021 initial public offering (IPO) price of 295p.
WHY HAS SERAPHINE FAILED TO DELIVER?
The loss-making maternity wear brand, whose products have previously been flaunted by Kate Middleton, has issued a string of profit warnings since IPO after wrestling with supply chain problems, online marketing cost inflation and falling sales amid the worsening cost-of-living crisis.
Results for the first half to 2 October 2022 revealed a £3.9 million loss before tax on a disappointing 12.1% drop in product sales to £18.9 million, which CEO David Williams pinned on the ‘combined headwinds of the macro-economic backdrop and inflation in marketing costs’.
WHAT IS THE BOARD SAYING?
Mayfair Equity Partners, which currently owns 21.7 million Seraphine shares or 43% of the issued share capital, insisted it ‘remains supportive of management and their strategy’ and has agreed to invest up to an initial £5 million in the company to support and accelerate its growth.
Sharon Flood, chair of Seraphine, said the group has ‘faced an extraordinary convergence of challenges since listing in 2021 including the global supply chain crisis, the cost of living crisis and substantial inflation in online marketing costs.
‘Whilst the whole retail sector has been affected by these issues, Seraphine, a relatively smaller company new to the London Stock Exchange (LSEG) with a large reliance on e-commerce, has, we believe, been disproportionately challenged.’
Flood added that whilst management is ‘cautiously confident’ in its ability to restore profitable growth in the future, ‘additional capital now would enable us to make investments to accelerate our growth strategy. Seeking this capital on-market would likely be highly dilutive, and the restoration of value would take time.’
This take-private deal would ‘remove the substantial costs associated with being listed and afford management the time and space to give their full attention to a return to profitable growth.’
Mayfair Equity Partners’ Bertie Aykroyd explained that the depressed share price is ‘negatively impacting Seraphine’s ability to deliver on its strategy and attract and retain talent. We believe that it would be beneficial for Seraphine, its employees, and its other stakeholders to continue its growth and development as a private company.’
