// Boohoo has been attacked for its deal to buy out PrettyLittleThing for up to £323m
// The online retailer initially purchased two thirds of its smaller rival in 2017 for just £3.3m
Boohoo has reportedly been attacked for its “scandalous deal” to buy out fellow owners of fashion retailer PrettyLittleThing for up to £323 million, days after being attacked by a short-seller.
The online fashion retailer initially purchased two thirds of its smaller rival in 2017 for just £3.3 million and is now set to purchase the rest.
The deal will see PrettyLittleThing founder Umar Kamani and his fellow shareholders receive £161.9 million in cash, with the rest of the payment coming in Boohoo shares, The Telegraph reported.
- With Love Island postponed, can fashion retailers replicate the awareness boost?
- Boohoo acquires 34% stake to wholly own PrettyLittleThing
The deal comes after Boohoo faced criticism from short-seller ShadowFall, which sent shares crashing earlier this week when it claimed the retailer had exaggerated the amount of cash flowing.
ShadowFall also said Boohoo was treating cash generated by PrettyLittleThing as though it owned the business outright.
Shares in Boohoo jumped 15 per cent, or 50p, to 385p when it announced the deal, hitting profits for any short-sellers targeting it.
Boohoo is paying at least £269 million for PrettyLittleThing, but the sum could rise if the company’s share price averages 491p or more for six months between the deal closing and March 2024.
Last year, PrettyLittleThing made a profit of £45.2 million.
ShadowFall had estimated it would cost the fast-fashion website £1 billion to buy the rest of the business.
Earlier this month, Boohoo said it had fundraised £200 million from investors to pounce on weaker rivals during the Covid-19 pandemic.
Boohoo said it has enough cash to pay for the PrettyLittleThing stake without having to use the money from the equity raise.
The post Boohoo under second attack by short-seller in less than a week appeared first on Retail Gazette.