Mike Ashley’s Frasers Group has ruled itself out of the race to buy Revolution Beauty, the struggling cosmetics retailer that put itself up for sale last month.
Earlier in June, the owner of chains such as Sports Direct and House of Fraser revealed it was one of a number of parties conducting due diligence as part of the formal sale process.
However, in a short statement today, Frasers said it does not intend to make an offer for Revolution Beauty.
Earlier reports had noted that Frasers’ interest in Revolution Beauty could stoke animosity between Ashley and Debenhams. Debenhams holds a large minority stake in Revolution Beauty, while Frasers is a significant shareholder in Debenhams and blocked the change of its legal name from Boohoo earlier this year by voting against the plan.
Responding to Frasers’ decision today, Revolution Beauty said: “The company continues to have constructive engagement with a number of other interested parties.
“Current discussions may be altered or terminated at any time, and, accordingly, there can be no certainty that an offer will be made for the company, nor as to the terms on which any offer may be made.
“In parallel, the company is also continuing its positive engagement with its shareholders, including in respect of an equity raise.”
Revolution Beauty has had a torrid run on the London stock market and now has a market capitalisation of barely £20m. Its stock has collapsed by over 70% in the last 12 months alone after being embroiled in probes relating to its accounting and seeing its sales plummet following a major rationalisation of its product portfolio.
NAM Implications:
- Given that continuing uncertainty can cause investors to be increasingly cautious…
- …Frasers backing off represents a serious setback for Revolution Beauty.
- In which case, the price tends to fall…
- …until a price level is reached that rekindles interest.
