Cliff Notes
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Mike Ashley’s Frasers Group is considering a potential takeover bid for Revolution Beauty, amid tensions with rival Debenhams, which holds a significant stake in Revolution.
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Revolution Beauty has faced significant turmoil, with its stock plummeting over 70% in the past year, leading to a market capitalisation of just £20 million.
- The company is currently in a formal sale process and has invited other potential bidders, with Frasers’ interest reflecting its strategy to diversify beyond traditional retailing.
Ashley’s Frasers explores bid for ailing Revolution Beauty | Money News
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Mike Ashley, the high street billionaire, is exploring a cut-price takeover bid for struggling Revolution Beauty – a move that would stoke animosity between him and rival London-listed retailer Debenhams.
Sky News has learnt that Frasers Group, which owns retailers ranging from House of Fraser to Evans Cycles, has approached Revolution Beauty about a potential offer for the company.
Retail industry sources said this weekend that Frasers was considering whether to bid but was not certain to do so.
Revolution Beauty, which sells branded cosmetics, put itself up for sale last month as it warned investors that it was evaluating options to establish “a more robust capital structure with additional capital to invest into the company”.
It said it had received a takeover approach from a third party – thought to be a reference to a bidder other than Frasers Group – and invited other suitors to contact its advisers at Panmure Liberum, the investment bank.
To facilitate the sale process, Revolution Beauty has parachuted in Iain McDonald, an experienced City figure whose directorships include a seat on the board of Debenhams Group, as chairman.
Debenhams holds a large minority stake in Revolution Beauty, while Frasers is a big shareholder in Debenhams and blocked the change of its legal name from Boohoo earlier this year by voting against the plan.
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.
The company has at various points been embroiled in probes relating to its accounting and a multimillion pound settlement with its founder, Adam Minto.
In January, it reached a settlement with Chrysalis Investments, its former shareholder, after it made a series of allegations against the company.
Revolution, which positions itself as a mass market beauty range, is sold through thousands of outlets including Superdrug stores in the UK.
It built a strong following among younger consumers by forging collaborations with media properties including the ITV dating show Love Island.
Frasers’ interest in acquiring Revolution Beauty would reflect its growing interest in expanding beyond pure retailing in recent years.
Under chief executive Michael Murray, it has also built stakes in companies such as THG, the owner of beauty brands such as LookFantastic.
Because the auction of Revolution Beauty is taking place through a formal sale process, the identity of prospective bidders does not have to be disclosed in the usual way.
It was unclear on Saturday whether Frasers intends to make a statement confirming its interest to the London stock market next week.
On Friday, shares in Frasers closed at 728.5p, giving it a market value of £3.3bn.
Any offer for Revolution Beauty is thought to be unlikely to ascribe a significant premium to its current valuation.
Spokespeople for Frasers and Revolution Beauty both declined to comment.