George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
I've just been thinking...if it it the case that boo have got the founders on side in order to get control to then perhaps surpress the sp so they can buy it cheap (in a worse case scenario), they would surely have to have offered them a princely sum to pay them for no longer seeing the re-rate in their Rev B holdings.
Surely whatever equivalent price they have offered the founders, even if the value is via boohoo shares. Wouldn't they be obligated under the takeover code to offer this as the lowest takeout price to all Rev B holders? (the boohoo shares value given verses the value of their former Rev B shareholdings would give an equivalent Rev B price).
It's the essence of the takeover code:
B1
5.7.21GENERAL PRINCIPLES
1. (1) All holders of the securities of an offeree company of the same
class must be afforded equivalent treatment.
(2) If a person acquires control of a company, the other holders of
securities must be protected
This part also seems noteworthy:
Without prejudice to the general application of this definition, the following
persons will be presumed to be persons acting in concert with other persons
in the same category unless the contrary is established:
(1) a company (“X”) and any company which controls#, is controlled by or
is under the same control as X, all with each other;
(2) a company (“Y”) and any other company (“Z”) where one of the
companies is interested, directly or indirectly, in 30% or more of the equity
share capital in the other, together with any company which would be
presumed to be acting in concert with either Y or Z under presumption (1),
all with each other;
This seems noteworthy because I can't see the founders effectively selling their shares to boo for less than £1? After this update I can't even see the founders selling for a pound tbh with the Walmart launch and the fact that they founded the company and must still be attached to it. If this is the case the takeover panel would insist all Rev B holders have to be given the same offer?
https://www.thetakeoverpanel.org.uk/wp-content/uploads/2023/06/504744_03_The-Take-Over_Bookmarked_22.05.23-updated.pdf?v=22May2023
Another thought I've had in terms of the boo move...what if they don't really intend to actually make any big moves but just want to gain some more cheaper shares when this re-lists?
Their rns clearly created some uncertainty (and even if the founder(s) aren't with them they are prob not going to publicly state they are not?) which could have subdued things when this re-lists, the only party who wouldn't be uncertain when this re-lists would be boohoo ready with dry powder.
Obv Rev B's great RNS on Fri will have alleviated some of this negative effect however.
6 of the 15 new finding nemo collab products are sold out on the US site - https://www.revolutionbeauty.us/makeup/collaborations/revolution-x-disney-pixars-finding-nemo.list
Looks like they are having a good promo campaign for it - https://www.instagram.com/p/Ct2HN7PuTw9/?hl=en
The collab is launching exclusively into Walmart stores today (following on from the exclusive Fortnite collab). Then also in DM Deutshland, in August. DM is a large retailer in Germany and has other stores in Europe.
I'm not sure the reducing revenue point would make sense because obv they have re-instated the accounts to show only the genuine revenues for FY2023 in line with the investigation findings etc. So surely they were comparing genuine revenues from Q1 24 with genuine revenues from Q1 23.
It isn't out of line with peers such as Warpaint and ELFs growth in this period. However it is out of line with the "high single digit revenue % growth for FY24 year forecast". Unless they were going crazily prudent with the FY forecast.
I agree they were brilliantly timed buys but I suppose going back to my point if it's believed boo do not ultimately want the Rev B sp to rise (due to wanting to buy the whole thing low) and the only way to stop them is dilution then dilution wouldn't be such a bad move.
In terms of Bobs age I do agree perhaps there could be a more relevant board but he is very well respected in the city in general as a CEO after what he did with Mears group. I doubt Bob knows or has much input in the specific beauty/makeup side of things but seems like a safe pair of hands to have at the helm.
Also I would say it does seem a bit harder for boo to claim Rev B needs to focus more on growth when Rev B just announced 60% growth yoy for quarter 1 (am still a bit perplexed by this though as their forecast for the year was/is? high single digit % revenue growth).
Well normally I would agree dilution to be bad wolf however many on this message board seem to be keen on the idea of taking control of Rev B, then in some manner getting it's sp down and then forcing a low takeover from the minority holders.
Not sure how possible that truly is however for whatever reason Bob H did spell that kind of thing out as a possibility in the rns but perhaps it was just a way of persuading holders to vote to stay with him and his team instead?
From what I can see Rev B can delay the meeting and vote till Aug 7th latest.
Something I have wondered about if Bob continues to view boo as hostile rather than collaborative is if he could do a private placing with another equity partner.
The IPO admission document rules expired 15 months after IPO which was in Dec 2022. They haven't had an AGM due to the accounts delay and 10 month share suspension etc. Therefore technically they are in no-mans land.
In the IPO admission document it refers to non-preemptive shares (shares that can go to one party instead of to all shareholders in proportion to their holdings) and gives standardized permissions to dilute by 5% for general purposes and 5% for an acquisition. Not sure how much they have already used any of this or to what extent the proposed nil cost 3.4% management incentive shares to kick in on re-listing would be bound by this or if its seperate.
However the new guidance actually suggests that companies should be able to dilute by 20%.
Considering there is no current agreement due to expired AGM which is due to shares being suspended for 10 months for fraudulent actions by previous management, could Bob not just go with the up to 20% dillutive private cash raise with another equity partner/partners by Aug 7th? This would be enough to block a potential hostile takeover. He could make an argument that this is now the standard therefore this is the only thing management have to go by in the unusual situation Rev B find themselves in.
He could also argue that it was feared the previous CEO (who had to step down for fraudulent activities) was going to gain control again and this would put shareholders at further risk. Therefore the raise with an external party was done to protect shareholders interests. This would technically be true.
Again obv I would hope it not come to this and have no idea if it would be possible and would probably result in legal action from boo, but most rev b holders would be happy if it meant boo not gaining control (only if it appeared boo had bad intentions, if boo were collaborative I don't think Rev B holders care as-long as the sp goes up).
https://www.pinsentmasons.com/out-law/analysis/freedom-non-pre-emptive-uk-share-issues
I don't think even that would be enough JG.
Their holdings at IPO were £78.3 million each and now at 19p they must be around £9.3 mllion each.
If Boo were to offer them £56 million each it would be equivalent to their rev B shares if sp got back to 115p a share.
This may not even be enough as the founders I believe would imagine their holdings getting back to IPO eventually and may not even be that bullish on boohoo overall. Then consider their attachment to Rev B and things like the Walmart launch and Rev Bs amazing growth in quarter 1.
However lets say they did accept, boo would have to dilute by £112 million for the two founders. This would dilute boo at current market cap by 26.4%.
They would still then only own 58% of Rev B. Plus the founders would have significant influence at boo owning 13.2% each and would likely be on the boo board of directors due to their holdings. This would seem a slight governance nightmare for Boo with Mintos recent actions?
Equally they could pay in cash but then they'd be eating into their RCF loan which is their only real cash, it may not even be allowed?
Agree JG not only Minto but they'd need to pay off the former rev b chairman as-well via cash or boo share for his lost Rev B holding. They'd need to pay them a very large figure imo to compensate for parting with losing the likely strong re-rate on their shares.
Plus Boos own £15 million stake wouldn't reach the potential it would have.
Also no-one would trust boo anymore as they apparently doubled crossed Bob Holt so how can you believe any assurance they gave you in future corporate negotiations.
They'd then have control but would be working with the guy (Minto) who stepped down for fraudulent activities. Doesn't exactly look great for boo governance.
This is the link from the 20% equity raise part - https://www.pinsentmasons.com/out-law/analysis/freedom-non-pre-emptive-uk-share-issues
I've been thinking more on Rev B defenses if we are in a situation where boo continue to want to go hostile and still have support going into early august as a worst case scenario.
Could Bob not kind of...break/bend the rules a bit around equity raises? The current company rules from IPO as far as I know were only valid for 15 months after IPO, so expired in December 2022.
From what I understand, in terms of non-premptive shares (shares that can go to one party instead of to all shareholders in proportion to their holdings) the IPO rules had the standard guidance of up to 5% equity raise allowable for any purpose and 5% for an acquisition. It's not clear if the nil cost management incentive 3.4% dilution proposed on re-listing is part of or bound by these rules.
Technically speaking Rev B could make a small acquisition by early Aug costing a few million and dilute by 5%? With the other 5% could dilute by 10%. This still wouldn't be enough to block if both founders are with boo but would be if only one of them was.
However either way this standard has expired. Since this has happened the standard rules have increased -
"The PEG’s 2015 principles restricted companies to seeking authorities of no more than 5% of their issued ordinary share capital (ISC) for general purposes, and a further 5% of ISC to be used in connection with an acquisition or specified capital investment. Those figures have now both been raised to 10%. In addition, companies can expect shareholder support for additional amounts of ‘2% + 2%’ respectively to be used for the purposes of making a follow-on offer to retail shareholders.
The ability to issue up to 20% of ISC for any purpose was approved temporarily by the PEG during the initial stages of the Covid-19 pandemic, subject to many of the same conditions set out in the revised statement of principles. That this was generally perceived to have been successfully implemented by companies has led to the increase in the limits on a permanent basis."
Considering there is no current agreement due to expired AGM which is due to shares being suspended for 10 months for fraudulent actions, could Bob not just go with the 20% dilution? He could make an argument that this is now the standard therefore this is the only thing management have to by in this unusual situation.
He could also argue that it was feared the previous CEO (who had to step down for fraudulent activities) was going to gain control again and this would put shareholders at further risk. Therefore the raise with an external party was done to protect shareholders interests. This would technically be true.
Only boohoo would complain and sue (literally suing on the basis that they were prevented from working with someone who stepped down due to fraudulent activity in order to force shareholders to sell their shares far lower than they wanted - I'm sure the judge would sympathize).
Minto might also sue but would be being sued himself.
Boohoo FY23: Revenue drops 9%
Rev B FY23: Low single digit revenue growth
Boohoo FY24 Revenue forecast: Flat to down another 5%
Rev B FY24 Quarter 1 - Sales up 60% yoy
Boohoo to Rev B: "You know, we can help you with your growth problem".
I guess prob you are right PhatJ, also wouldn't they have updated by now such a large error if it was?
However they must have already mostly known these results when doing the interim results so why did they forecast only high single digit revenue growth when they had just finished a quarter March - May when they had had 60% revenue growth? (interims were released 2nd June). Seems incredibly prudent?
That's great growth though, thinking about it not out of line with peers - Warpaint growth up 45% yoy in the 5 months to Mar 31st and ELF Beauty up 78% yoy in the 3 months to March 31st.
Interesting to note Rev B likely now likely matching warpaint's ebitda forecast for this year based on these results but also at around 2.5 times warpaints revenue. Warpaint valued at around £210 million so Rev B has to get to 68p to match warpaint (should be higher than them).
Obv don't need to go over the ELF comparable again but is very favourable to Rev B
You never know AJC but you'd think boo would have to offer them a large amount (they shares are down from 160p). I'd imagine the founders would be believing their shares could do well just left on their own, especially with the walmart launch. Minto still liking rev B posts on linkedin, you'd think he's still attached to the company after founding and being part of it so long.
Boo would then have control at 58% though still not enough to force a takeover as would need 75% of votes cast. But would have control so could do stuff to probably eventually force some kind of takeover. Hopefully by that point sp would have recovered a lot more.
Lol Hereshopin, I'm not against Boo overall, I actually have some boohoo shares.
However if you can lose out as a shareholder when your company is doing well then there's almost not much point in being in the stock market. I of course understand the risk of investing and paying the price if your company then does badly but if it does well and a shareholder loses out then it's a bit crazy. People invested in Rev B took the risk that things wouldn't be as bad as they feared from the issues given pre-suspension. In the end things have arguably turned out not as bad as perhaps feared so to not be rewarded for taking the risk would be obv be very frustrating.
If boo are aiming for genuine growth and synergies etc I don't have so much of a problem.
Great rns today...boo still have the potential to gain management control but I think the doom scenario of them purposively destroying it from the inside to buy it low will have become a lot harder legally and reputationally when it's clear Rev B is on the up with Bob Holt et al.
I mean if such a shareholder robbery from majority investors against the under 50% could be done to a company like Rev B who are performing well and have a promising future then it could surely happen to any company, including boohoo themselves (Mike Ashley could take control with others theoretically, apparently anything goes nowadays?), especially considering boohoo are performing worse than Rev B in terms of revenue growth and margin.
Momajid my point was if the over 50% holders of boohoo wanted to take it over, and rob it from the minority holders they could do so (coz apparently the FCA doesn't care about these things?), the same way boo are hoping boo robs Rev B. Or maybe its not so simple to do that as the boo forum seem to believe?
Just coz boo makes more revenue wouldn't help it in the scenario of a majority board finding a way to buy it out for as cheap as possible.
I can't give you that calculation but could try work it out, all I know is Rev B had £21m net debt in July 2022 and have £18 million now so it doesn't seem to have been a problem for the last year. They operated with £80 million debt before going public.