Seraphine recommends cash bid to shareholders, values it at £15.3 million
Premium maternitywear brand Seraphine signalled an end its unhappy time as a stock exchange-listed company on Friday, saying that it's recommending an offer to be taken private.
And the value of the deal? £15.3 million. That's after it has agreed to an offer of 30p, a share from Mayfair Equity partners (MEP), its existing private equity backer.
It's bad news for anyone who might have bought it at its IPO. When it first listed on the stock exchange around 18 months ago the shares were priced at £2.95 each. That said, the offer price is still a premium to the price at which the shares closed on Thursday, with them costing less than 10p each under 24 hours ago.
The deal to go private again comes after the retailer has seen tough times with it saying last month that the environment was “highly challenging” and that its revenues had fallen.
Assuming the other shareholders accept the deal, which seems likely given the big premium compare to Thursday's closing price, it’s unclear when the deal might complete.
Seraphine was founded by Cecile Reinaud in 2002 and grew into a global business with stores in key shopping cities and a webstore shipping to 100+ countries.
She retired from the business in 2020, ex-ASOS exec David Williams became CEO and an MEP-backed management buyout valued it at around £50 million. The 2021 listing saw MEP retaining a 40% stake and investors enthusiastically buying into what looked like a business with a strong future.
But like other online sellers further down the price scale, its fortunes have declined of late.
Yet Mayfair clearly still sees value in owning it. Bertie Aykroyd, partner at the firm, said: “As a major shareholder in the company, Mayfair remains supportive of management and their strategy. However, Mayfair believes that the company's share price is negatively impacting Seraphine's ability to deliver on its strategy and attract and retain talent. We believe that it would be beneficial for Seraphine, its employees, and its other stakeholders to continue its growth and development as a private company. This would allow [it] to operate without the material level of costs of maintaining a public listing, supporting the company during this period of macro-instability.
“As part of this transaction, we are also providing additional capital that will strengthen [the] balance sheet and support our intention to safeguard the business. Anticipating that current pressures on the company and market are to persist for the near-term, our objective is also to provide liquidity to certain shareholders to realise their investment for cash at a significant premium to the current market value.”
And company chair Sharon Flood added: “Seraphine has faced an extraordinary convergence of challenges since listing in 2021 including the global supply chain crisis, the cost of living crisis and substantial inflation in online marketing costs. Whilst the whole retail sector has been affected by these issues, Seraphine, a relatively smaller company new to the London Stock Exchange with a large reliance on e-commerce, has, we believe, been disproportionately challenged.
“Despite the huge efforts of our people and management, who have managed to improve gross product margin, achieve higher basket sizes and expand into several new markets, the business continues to operate in a very uncertain and challenging market. Whilst we are cautiously confident in our ability to restore profitable growth in the future, additional capital now would enable us to make investments to accelerate our growth strategy. Seeking this capital on-market would likely be highly dilutive, and the restoration of value would take time.
“The Seraphine independent directors believe the offer from Mayfair, which follows a period of intensive negotiation and which represents a premium of approximately 200 per cent. to the current share price is a fair and reasonable offer that we recommend to our shareholders.”
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