Frasers Group Pursues Potential Acquisition of Revolution Beauty

Mike Ashley’s Frasers Group is exploring a potential acquisition of Revolution Beauty, a development that could escalate rivalries with shareholder Boohoo, among others.

On Monday, Revolution Beauty’s shares surged as much as 18 percent after the company announced to the market that Frasers Group was “one of several parties conducting due diligence” on its business operations.

This interest from Frasers follows Revolution’s announcement last month that it was officially up for sale, having attracted the attention of an undisclosed buyer.

Revolution cautioned its shareholders in response to media reports of Frasers’ interest that “there can be no certainty that this interest will lead to a formal offer for the company.” The firm indicated that it would provide further updates when necessary and advised shareholders to refrain from any action for the time being.

The company, which trades on the AIM market, has faced significant challenges since its listing in 2021, with its market capitalization currently standing at only £20 million—reflecting a steep 66 percent fall in share price over the preceding year.

Revolution has recently dealt with accounting scrutiny and has negotiated a substantial settlement with its founder, Adam Minto.

Additionally, Revolution has been embroiled in conflicts with Boohoo, which holds a 27 percent stake in the company, as Boohoo has sought changes in Revolution’s leadership.

Frasers Group has also been engaged in a prolonged dispute with Boohoo over governance issues, performance concerns, and transparency among the latter’s leadership.

Recently, Frasers Group has aimed to increase its influence over Boohoo, now rebranded as Debenhams, by proposing a financial boost amidst ongoing discussions related to debt refinancing.

According to reports, Frasers has requested a meeting with Debenhams’ non-executive chairman, Tim Morris, to discuss the organization’s potential borrowing options.

In correspondence to Morris, facilitated through the law firm White & Case, Frasers stated they have been attempting to arrange an urgent discussion for several weeks.

Debenhams is currently negotiating a debt package that could reach £175 million, with £50 million expected from asset-backed lenders. The remaining £125 million will come from refinancing a previous two-year loan taken out last October, which Ashley criticized as the worst refinancing deal executed by a public company in recent memory.

A potential bid for Revolution Beauty would mark another step in Frasers Group’s strategic investment efforts within the UK retail landscape, alongside recent acquisitions involving Boohoo, Currys, and AO World.

By the end of the trading day, Revolution Beauty’s shares increased by 9.7 percent to close at 8p, while Frasers Group saw a slight decline of 0.8 percent, finishing at 723p, and Debenhams edged up by 0.5 percent to 21p.