- £191 million takeover recommended
- Alliance family controls 60% of shares
- ‘Better able’ to grow as a private company
Online clothing and homewares retailer N Brown (BWNG:AIM) is set to become the latest UK stock to be taken private after receiving and recommending a £191 million takeover bid from a group controlled by non-executive director Joshua Alliance, a member of the family which originally built the company.
Shares in the JD Williams-to-Jacamo brand owner, which has had a rough ride on the stock market over the past decade or so, rallied 43% higher to 38.5p on the news.
Through his Falcon 24 Topco acquisition vehicle, Joshua Alliance has made a cash offer pitched at 40p per share, a 48.1% premium to the undisturbed share price, which N Brown’s board has recommended shareholders accept.
Since the Alliance family holds sway over 60% of N Brown’s shares, the takeover is sure to succeed.
WHY HAS N BROWN STRUGGLED?
Also renowned for its Simply Be fashion brand, N Brown has struggled with fierce competition, legal issues and over-estimating the opportunity for plus-sized fashion and, for a while, seemed to make more money from interest on customer credit than it did from selling clothes.
Outlining its rationale for the takeover (17 October), the Alliance family said given N Brown’s current shareholder structure and very low trading liquidity, as well as ‘limited’ UK fund manager appetite for small-cap consumer stocks, the fashion firm is ‘not benefiting from being listed on the AIM market, whilst having to bear significant costs associated with its listing.’
Therefore, the Alliance family believes N Brown is better able to achieve its growth potential as a private company.
However, it retains confidence in the current management team led by interim chair and chief executive Steve Johnson and insisted the takeover represents ‘an opportunity to acquire a portfolio of well-established fashion brands, supported by an innovative financial services platform that is currently under development, with a long history and heritage in the UK clothing and footwear market.’
BACK IN THE BLACK
Shares in Manchester-headquartered N Brown have been in a strong uptrend since early summer, with Johnson’s multi-year transformation plan bearing fruit despite a soft trading backdrop and unseasonal weather in the year-to-date.
N Brown built on a return to profit for the year to February 2024 with encouraging results (10 October) for the half to August 2024.
These revealed a surge in adjusted pre-tax profit from £100,000 to £3.6 million driven by cost efficiencies, a stronger focus on ‘profitable trade’ and a lower interest bill, with net debt down almost 20% to £211.6 million.
Management also flagged an improving sales trend through the half and into the third quarter, giving it the confidence to leave the full-year 2025 outlook unchanged.
