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(Alliance News) - Online fashion retailer boohoo Group PLC on Monday said it is has acquired all of the intellectual property assets of department store Debenhams Retail Ltd for GBP55 million in cash.
Shares in boohoo were trading 4.3% higher in London on Monday morning at 347.09 pence each.
The company will only be acquiring brands and associated intellectual property rights. The deal does not include Debenhams retail stores, stock, or any financial services.
"The transaction represents a fantastic opportunity to grow the group's target addressable market and increase the share of wallet opportunity through a new capital light and low risk operating model that is complementary to the group's highly successful direct-to-consumer multi-brand platform," said boohoo.
The AIM-listed firm said it intends to "rebuild and relaunch" the Debenhams platform. It expects to relaunch Debenhams on the group's platform in the first quarter of the 2022 financial year, which for boohoo begins in February.
boohoo Executive Chair Mahmud Kamani described the deal as "transformational".
"Our ambition is to create the UK's largest marketplace. Our acquisition of the Debenhams brand is strategically significant as it represents a huge step which accelerates our ambition to be a leader, not just in fashion eCommerce, but in new categories including beauty, sport and homeware," said Kamani.
boohoo highlighted that Debenhams has six million beauty shoppers and 1.4 million Beauty Club members. Debenhams' own fashion brands will also be absorbed into boohoo's current portfolio and sold via the Debenhams website.
The administrators of Debenhams, FRP Advisory, confirmed the boohoo deal, adding: "The closing down sale will continue in stores for several weeks until the stock liquidation is completed and the value of this stock will be retained for creditors. Regrettably, all the UK stores will then be permanently closed."
Commented Geoff Rowley, joint administrator and partner at FRP: "I expect that the agreement with boohoo may provide some job opportunities but we regret that this outcome does not safeguard the jobs of Debenhams' employees beyond the winding down period."
In its most recent financial year to August 31, 2020, Debenhams generated unaudited gross transaction value of GBP1.52 billion and unaudited earnings before interest, taxes, depreciation and amortization of GBP12.7 million. boohoo also noted Debenhams' online business generated unaudited net revenue of about GBP400 million in the period.
Debenhams started a liquidation process last month after failing to secure a last-minute rescue sale, most recently announcing January 13 it would be closing six more stores and cutting 320 jobs. And now, with stores closing across the 242-year-old brand, it is unlikely many of the remaining 12,000 jobs will be saved.
Boohoo has previously bought a number of well-known high street brands out of administration, turning them into online-only operations, including Oasis, Coast and Karen Millen.
By Paul McGowan; paulmcgowan@alliancenews.com
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