N Brown is set for acquisition by a firm owned by its director, Joshua Alliance, prompting its exit from AIM.
- The company’s share price surged by over 40% following the announcement.
- The acquisition aims to address challenges like reduced interest in UK small-cap stocks.
- Valued at £187 million, the deal is a significant premium over the current market cap.
- N Brown emphasizes accelerated growth potential by delisting from public markets.
N Brown, a retail company known for brands like JD Williams and Simply Be, is poised for acquisition by a firm owned by its non-executive director, Joshua Alliance. The company’s strategic decision to delist from the AIM stock market is driven by a reduced appetite for UK small-cap stocks and the financial burden associated with its listing.
Following the acquisition announcement, N Brown’s share price experienced a notable increase of over 40%, indicating positive market reception. The transaction is valued at 40p per share, which translates to approximately £187 million, significantly higher than its current market capitalization of £126 million.
N Brown has cited limited trading liquidity and decreased interest from UK fund managers in small cap consumer stocks as primary reasons for seeking delisting. The company expressed that its presence on the AIM market is not yielding the intended benefits, while accruing significant listing costs.
The acquisition is engineered by Bidco, a new entity that belongs to Joshua Alliance, who plays a crucial role in N Brown’s leadership. Completion is anticipated in early 2025, subject to shareholder approval, aligning with the company’s broader strategic goals.
Joshua Alliance underscored that this acquisition would bolster N Brown’s long-term growth by providing access to additional resources and capital. He remarked, “Support N Brown in accelerating its long-term growth potential and provide, where needed, access to additional capital, expertise and resource to accelerate the longer-term potential of the business.”
In discussing the company’s current economic context, Alliance highlighted that N Brown is navigating through broader economic challenges. For the fiscal period ending March 2024, the company faced a turnover reduction of 9.8% to £601 million, alongside a 12.5% decrease in adjusted EBITDA to £47.6 million.
Steve Johnson, the interim executive chair and CEO, emphasized that N Brown remains committed to serving its loyal customer base despite these challenges. He stated, “N Brown continues to consistently serve its loyal and otherwise underserved customers, with exciting long-term prospects for the business.”
Johnson also noted that Bidco’s proposal aligns with N Brown’s strategic objectives, as independent directors unanimously recommend the acquisition to shareholders. The firm is optimistic that moving away from public markets will facilitate greater strategic flexibility and growth.
The acquisition by Joshua Alliance’s firm aims to address market challenges and enable N Brown’s strategic growth beyond public markets.
