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Summary
- Boohoo has taken over three of Arcadia’s brands -- Dorothy Perkins, Burton, and Wallis, for a whopping sum of £25.2 million.
- The Arcadia group failed to cope up with the pandemic and had entered administration in November 2020.
- After the completion of the takeover, the websites for the three brands will continue to remain functional like before.
UK-based online fashion retailer Boohoo PLC (LON: BOO) has declared that it has taken over Arcadia Group’s three brands -- Dorothy Perkins, Wallis, and Burton. In January, the company had disclosed that it was in talks with the Arcadia Group for buying these brands.
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Agreement details
The deal, which is worth £25.2 million, has to be paid in cash from the existing resources. The transaction is estimated to be completed by today, 9 February and the brands will be transferred over to the Boohoo group by the end of first quarter of this fiscal (May 2021). The takeover agreement covers the digital assets, e-commerce, and inventories of the businesses. However, the remaining 214 shops are not included in the acquisition, whose closure will result into around 2,450 job losses.
The company has decided to save the jobs of just 260 employees, who will be mainly have specific roles in the head office, such as buying, designing, merchandising, and the digital wings of the businesses. Besides, Deloitte, the administrator of Arcadia Group, said that some workers will be retained for the month-long transition period.
After the completion of the takeover, the individual websites for Dorothy Perkins, Burton and Wallis would continue to remain functional. They are currently open for home delivery orders.
The Arcadia group also revealed that the three brands had generated a revenue of roughly £428 million across all channels and had reported an unaudited EBITDA loss of £14.3 million for the full year ended on 29 August 2020.
Arcadia falling fortunes
The Covid-19 pandemic forced several lockdowns and the buyers shifted to online shopping changing landscape of the British retail sector. The ongoing crisis adversely affected the high street, brick-and-mortar retailers.
Arcadia group, which failed to cope up with these challenges, collapsed into administration in last November. Since then, it had been looking for suitable buyers to sell its brands and pay off the debt.
Also Read: Asos (LON:ASC) In Talks to Buy Arcadia’s Famous Brand Topshop
Last week, the online retailing giant Asos had disclosed that it had acquired Arcadia group’s brands Topshop, Topman, and Miss Selfridge for £330 million. The deal did not include any of the stores or warehouses risking at least 2,500 jobs.
In December, the Arcadia Group had sold its plus-size clothing brand, Evans to the Australia-based retailer City Chic Collective for £23 million.
In total, the administrators of Arcadia have raised more than £500 million till now.
Recent development
The Boohoo has come up with the takeover deal just after it announced that it had bought the Debenhams brand on 25 January for £55 million. The acquisition bid had led to a loss of almost 12,000 jobs.
Related Read: Boohoo (LON:BOO) Takes Over Debenhams for £55 Million
Share performance
The shares of Boohoo Group PLC (LON: BOO) were trading at GBX 352.40, which were down by 3.43 per cent on 8 February at 2:42 PM GMT, with investor’s sentiments weakened by speculations over the online sales tax to be introduced by the UK government.
