Boohoo peace deal with Revolution hinges on Holt
Boohoo and Revolution Beauty are close to ending the bitter protracted dispute between boards of the fast fashion retailer and the crisis hit beauty products business.
In a statement this morning Revolution Beauty said the deal avoids the “cost and “disruption” that litigation would bring.
The main terms of the deal are that Elizabeth Lake will remain as CFO, removing the previous concerns that the FY23 Accounts could be delayed and the Company’s trading on AIM once again threatened.
Boohoo will withdraw its call for a new general meeting of the company but chief executive Bob Holt and director Derek Zissman will resign. Holt will stay on as interim CEO until the end of August 2023.
The Manchester-headquartered fast fashion e-tailer owns a 26.6% stake in Revolution, the online beauty retailer.
Boohoo’s preferred boardroom team of Alistair McGeorge, Neil Catto, Rachel Horsefield and Peter Hallett will join the board, with former Matalan and Littlewoods boss McGeorge being appointed as executive chairman with the others becoming independent non-executive directors.
The new Board will comprise a majority of independent directors (with Alistair McGeorge and Neil Catto not being treated as independent given their existing and prior directorships of Boohoo).
However, the only potential block to a lasting peace is a settlement for Holt, who’s share option award appeared to fuel much of the fury of Boohoo’s side of the often bitter war of words.
A hugely successful businessman and philanthropist Oldham-born Holt is best known for building construction and home services company Mears Group to a publicly listed business with sales of £1.2 billion delivering “blue-collar services”.
Boohoo always maintained that Revolution, an ecommerce business selling make-up to tennagers and young adults, needed a board and executive leadership with more direct experience in that market.
Nevertheless, Holt also took on a complex business requiring an internal investigation following the suspension of its shares.
Holt and Elizabeth Lake have indicated they intend to exercise their share options.
“Bob Holt’s exit arrangements under the BH Agreement have been expressed as conditional upon the acquisition by boohoo, following the issue of the underlying option shares, of a number of shares sufficient to cover the tax payable by Bob Holt and Elizabeth Lake on the exercise of these options.”
Danni Hewson, head of financial analysis at Manchester investment platform, AJ Bell, said: “The final score in the fight between two beauty and fashion sellers is boohoo 1-0 Revolution Beauty.
“The latter’s board of directors is being overhauled after pressure from boohoo and it looks like the two companies are going to work together amicably, rather than fight it out. As 26.6% owner of the beauty business, boohoo has shown that it is not someone to mess around with.
“However, while it has secured the upper hand in this situation, one mustn’t forget boohoo’s problems with its own business. The fast fashion industry is in a fragile state, boohoo’s margins are below historical levels and both its sales and profits have been falling. Perhaps it needs to sort out its own house before meddling in others’?”
