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(Alliance News) - Revolution Beauty Group PLC on Wednesday hit out at boohoo group PLC's "opportunistic" attempt to replace the beauty products retailer's board.
Revolution Beauty proposed postponing its annual general meeting to late July or early August from June 27, to give shareholders time to mull over boohoo's request.
Online retailer boohoo owns just under 27% of the company, and said on Monday that it would vote against the re-appointment of Chief Executive Bob Holt, Chair Derek Zissman, and Chief Financial Officer Elizabeth Lake as directors of Revolution Beauty.
boohoo proposed adding Alastair McGeorge and Neil Catto to the Revolution Beauty board, the former as executive chair and the latter as CFO.
McGeorge, a boohoo non-executive director, is the current non-executive chair of tonic waters and mixers producer East Imperial PLC.
Catto is currently a non-executive director at indie games publisher tinyBuild Inc, and was previously chief financial officer of boohoo between 2011 and 2022.
"The board believes that boohoo's hostile requisition is value-destructive, opportunistic and self-serving, as well as not being in the interests of the company's shareholders as a whole," Revolution Beauty said.
"boohoo's actions appear to be a cynical attempt to seize control of the company without financial outlay nor any compensation to Revolution Beauty shareholders, and would appear to be a reckless strategy unless boohoo were confident of support from other shareholders of the company."
Revolution Beauty said boohoo's request was also poorly timed. It said it is "on the cusp" of having its shares restored trading on AIM.
Trading in Revolution Beauty has been suspended since September 1 after it failed to deliver its first audit by August 31. The company floated in July 2021.
The company said that boohoo's decision to intervene on Monday was done deliberately to destabilise rather than support the business. It also noted boohoo's M&A history.
"Shareholders will be aware of boohoo's track record of cheaply acquiring businesses that were in financial distress (which Revolution Beauty is not), as it did with Karen Millen, Coast and Nasty Gal (amongst others). If this were to be the fate of the company as well, shareholders would likely receive little or no value for their shares," Revolution Beauty said.
Revolution Beauty also noted that its strategy is not in keeping with boohoo's, which has a pure-play online business model.
It added: "Despite boohoo's assertion that the company's board (if controlled by boohoo) should have a 'senior leadership team with the right retail, e-commerce and consumer brands experience', unlike the company's current management team, the proposed boohoo director candidates do not appear to have any relevant experience in running a business in the beauty sector, nor in supplying a store estate and product range which is focussed on the high street. A growing proportion of the group's business (approximately 70%) is with global high street retailers.
"On the other hand, the current Revolution Beauty management team have a strong working relationship with the group's key retailers and other stakeholders globally. The current directors also have extensive experience in retail, e-commerce and fast-moving consumer goods growth businesses."
Shares in boohoo were up 1.8% at 34.83 pence in London on Wednesday afternoon.
Revolution Beauty highlighted that recent trading has been promising and it expects to deliver high single digit growth in revenue for the year ending February 28, 2024.
Revolution Beauty said its current directors and management team succeeded in completing the audit of financial 2022 accounts, which it claimed was a significant step towards re-admission of company shares to trading on AIM.
In September, the company's auditor BDO LLP said it had a "number of serious concerns" regarding the audit for the 2022 financial year, concluding that it was not able to sign an audit report. It recommended that Revolution Beauty appoint independent external advisers to conduct an investigation.
BDO concluded that it could not sign an audit report for the year, resulting in company founder and chief executive officer Adam Minto and executive chair Tom Allsworth stepping down during the investigation.
What's more, on Tuesday, Revolution Beauty announced potential legal action against founder and CEO Minto, claiming he breaches his responsibilities that contributed to the delay's of the 2022 audit.
By Will Neill, Alliance News reporter
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