N Brown is set to be acquired by a firm owned by non-executive director Joshua Alliance, signalling a strategic pivot for the company.
- The decision to delist from AIM is driven by diminishing interest in UK small-cap stocks and significant listing costs.
- A 40% surge in N Brown’s share price followed the news of the impending acquisition.
- The acquisition deal values N Brown at £187 million, a significant premium over its current market capitalization of £126 million.
- N Brown’s management anticipates that exiting public markets will facilitate accelerated growth and improved resource access.
N Brown, the Manchester-based retail company known for overseeing brands like JD Williams and Simply Be, is poised to undergo a significant transition as it prepares to be acquired by a company owned by non-executive director Joshua Alliance. This strategic move coincides with plans to delist from the AIM market, a decision influenced by a declining interest in UK small-cap stocks and the prohibitive costs associated with maintaining its current listing.
Following the announcement of the acquisition, N Brown experienced a more than 40% increase in its share price, underscoring investor approval of the decision. The acquisition agreement, priced at 40 pence per share, values N Brown at approximately £187 million. This valuation reflects a substantial premium over its existing market capitalization of £126 million, indicating confidence in the strategic direction proposed by the acquisition.
Joshua Alliance has articulated that the acquisition aims to bolster N Brown’s long-term growth potential. He emphasised that the business, in its current evolutionary cycle, would benefit from additional capital and expertise, which could be more effectively secured away from the public market setting. This stratagem aligns with a broader intention to reposition the company for future challenges and opportunities.
Despite confronting economic challenges, N Brown continues to serve its customer base effectively, albeit during a period of turnover decline. In the 52-week period ending 2 March 2024, the company’s turnover fell by 9.8% to £601 million. Simultaneously, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) contracted by 12.5%, falling to £47.6 million.
Steve Johnson, interim executive chair and CEO, remains optimistic about N Brown’s direction, citing exciting long-term prospects for the business. He noted that the proposed takeover by Bidco would expedite the company’s strategic initiatives to the advantage of all stakeholders. The acquisition, pending shareholder approval, is expected to be finalised in early 2025.
N Brown’s anticipated acquisition and AIM market exit represent strategic steps intended to harness untapped growth potential and navigate prevailing economic challenges effectively.
