N Brown's independent directors believe the cash offer gives the company a chance to get an immediate cash return at a price that is at a significant premium compared to the recent trading price of all their N Brown shares.
As part of the acquisition deal with N Brown, Bidco will acquire all shares of N Brown that Alliance or his associates do not already own. N Brown shareholders, excluding Alliance, will receive 40p per share in cash.
Joshua Alliance previously owned 6.6% of N Brown's shares, while his family holds an additional 53.4%.
The UK retailer explains the acquisition will be carried out through a Court-approved scheme of arrangement under the Companies Act.
GlobalData's retail analyst Alice Price told Just Style exclusively N Brown has faced a turbulent few years, largely due to volatile economic conditions since the pandemic. She explained that the group's brands have struggled to "resonate with consumers and appear tired," while also facing fiercer competition within the plus-sized market as non-specialist retailers strengthen their inclusivity offerings.
Prince concluded: "N Brown’s acquisition by Alliance family for a reported £191m, will see the company be taken privately and ultimately de-list from the Alternative Investment Market (AIM), after struggling on the stock market in recent years."
Bidco's ambitions for N Brown
Bidco argues N Brown isn't benefiting from its AIM market listing due to its low trading liquidity, limited interest from UK fund managers in small-cap consumer stocks, and the high costs of maintaining its listing.
The Alliance family-owned company believes the acquisition presents an opportunity to acquire a portfolio of well-established fashion brands, supported by an innovative financial services platform that is currently under development and has a long history and heritage in the UK clothing and footwear market.
Bidco is confident it can support N Brown's long-term growth potential by pumping in additional capital, expertise and resources wherever necessary.
The company said: "Given Bidco's ambitions and the associated capital requirements of executing on its plans for N Brown, Bidco believes that N Brown is better able to achieve its growth potential as a private company than as a public company, taking into account the dynamics of the markets in which N Brown operates, and the broader competitive landscape.
"Bidco has confidence in N Brown's current executive team and its leadership. Bidco plans to support the existing executive team's strategy and intends to work with N Brown's current executive team to develop, enhance and implement that strategy following completion of the acquisition."
Dwindling revenues, strategies to strengthen portfolio
N Brown, the parent company of brands like JD Williams, Simply Be, and Jacamo, reported a 6.7% decline in its half-year (H1) 2024 revenues (26 weeks ended 31 August 2024), falling to £277.2m from £297m the year before. This follows a 9.8% drop in full-year (FY24) revenues, down to £600.9m.
Despite its challenging financial results, chief executive Steve Johnson said at the time the Group delivered against its strategic and financial objectives. He stated: "We have kept to our transformation plans, despite the macro-economic backdrop, whilst building resilience through our strong balance sheet, and achieving adjusted EBITDA above market expectations."
In January, N Brown highlighted during the announcement of its third-quarter results that customer experience and strategic business positioning as key priorities for future growth.
The UK retailer has been investing in initiatives to bolster its brand portfolio, including the launch of new trading websites for its core brands to enhance its customer experience, a new campaign for its Simply Be AW24 collection, and the recent appointment of a creative agency to boost brand visibility.
