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Boohoo plc aims from the hip with $20m bid for NastyGal crown jewels

boohoo ecommerce M&A

Boohoo plc incorporated "Nasty Gal Ltd" in the UK on November 21st, 2016. This was renamed "Boohoo F I Ltd" on December 22nd, prior to the company announcing its $20m bid for the Nasty Gal brand name and its customer database on December 28th, 2016.

Could the company have placed a bid for Nasty Gal Inc property using Nasty Gal Ltd as a bidder? Well, they could, but it might not have looked proper in the eyes of many industry observers.

Our View:

So why did Boohoo plc incorporate the company "Nasty Gal Ltd" in the first place, before announcing its bid? Our view is that the company is run by management acting on impulse and inexperienced in running a plc. Once they noticed that Nasty Gal Inc had gone into bankruptcy proceedings they took the opportunity to incorporate the company name in the UK to put themselves in a favourable position to use the brand name. We are beginning to draw parallels with Sports Direct and the way Mike Ashley are holding investors at ransom.

Boohoo's stock price will continue to increase as long as they display positive growth and are protected from the stricter regulations weighing down on its larger competitors.

Who will be the next bidder?

Asos are clearly in need of more customers and significant revenue improvements. We would expect a bid from the company, at the very least to show its intention to compete with Boohoo for market share head on. The Nasty Gal customer database might be made up from customers more likely to order from someone like Boohoo, but Asos will no doubt be keen. There are many other bidders and Li & Fung may be one of the keener rivals...

Would Amazon be interested?

We do not see why they would not be interested. However, considering their history of acquiring active companies we would be surprised if an offer was tabled by the company.

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