Bidco to acquire N Brown in £191 million cash deal, sending shares higher

On Wednesday, Bidco, a company owned by Joshua Alliance, agreed to acquire N Brown Group plc in a transaction valuing the company at approximately £191 million. The acquisition will be executed through a court-sanctioned scheme of arrangement, which will result in Bidco owning all issued and to be issued share capital of N Brown, excluding shares already held by Joshua Alliance.

As of the close of business on the Latest Practicable Date, Joshua Alliance controlled about 6.6% of N Brown's share capital, with other members of the Alliance Family Concert Party holding an additional 53.4%. The acquisition terms entitle N Brown shareholders, except for Joshua Alliance, to receive 40p in cash for each share held, representing a substantial premium over the recent trading price of N Brown shares.

The cash offer reflects a premium of 111.0% over the 12-month volume-weighted average closing price, 63.8% over the 90-day period, and 48.1% over the closing price as at the close of business on the Latest Practicable Date. Alternatively, eligible shareholders may opt for unlisted ordinary shares in Bidco, though these shares will not be listed or transferable, with certain exceptions.

The offer for subscription, which will be made post-acquisition, will allow shareholders to subscribe for new Bidco ordinary shares, providing additional working capital for the Bidco Group. This follows Bidco's belief that N Brown's listing on the AIM market is not beneficial, given its current shareholder structure and limited trading liquidity. Bidco sees the acquisition as an opportunity to support N Brown's long-term growth and provide necessary capital and expertise.

The N Brown Independent Directors, advised by Rothschild & Co, have unanimously recommended the cash offer to shareholders, highlighting its immediate and significant premium. However, they have not formed an opinion on the share alternative due to its variable impact on individual shareholders, including limited liquidity and potential dilution.

The acquisition is subject to certain conditions, including shareholder and court approvals, and is expected to become effective in the first quarter of 2025. Bidco has already secured irrevocable undertakings from a majority of N Brown shareholders, representing approximately 70.8% of the issued share capital, to vote in favor of the scheme.

In statements, Joshua Alliance and Steve Johnson, Interim Executive Chair and CEO of N Brown, expressed their positive outlook on the acquisition's potential to enhance N Brown's growth and benefit stakeholders.

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Source: Investing.com