Frasers eyes Revolution Beauty as makeup brand faces financial strain

Frasers Group has confirmed it is considering making an all-cash offer to acquire Revolution Beauty. The announcement comes as the cosmetics brand continues exploring strategic options amid financial instability and a sale process complicated by overlapping ownership ties.

In a regulatory statement released today, the UK retail giant said it is taking part in Revolution Beauty’s formal sale process, which was launched on 21 May. The company emphasized that any potential offer would be made entirely in cash but stressed that no final decision has been made and there is “no certainty” that a bid will follow.

Revolution Beauty confirmed yesterday that Frasers is one of several parties conducting due diligence on the business. The company also advised shareholders not to take any action at this stage.

Revolution’s share price rose nearly 10% on the news, reflecting market optimism that a sale could stabilize the brand.

However, the company’s value has dropped sharply over the past year and now sits at around £28 million (US$35.7 million), down from its £500 million (US$638 million) valuation at the time of its 2021 stock market debut.

Ownership ties raise questions

A key point of scrutiny in the sales process is the complex ownership structure among the involved parties. Frasers Group holds a substantial stake in Boohoo Group (rebranded as Debenhams Group), which is the largest shareholder in Revolution Beauty — owning approximately 27% of the company.

Frasers Group holds a substantial stake in Debenhams Group, which is the largest shareholder in Revolution Beauty.Revolution Beauty has appointed Iain McDonald — a Debenhams Group board member — as chairman to oversee the sale process. FCA-regulated financial advisers are handling the potential sale.

Personal Care Insights approached Frasers Group, Revolution Beauty, and Debenhams Group for comment. None of the parties responded at the time of publication.

Leadership influence

The sale process unfolds amid a backdrop of concentrated ownership and recent turmoil at Revolution Beauty.

Apart from the Debenhams Group, the company’s largest shareholders are the co-founders Adam Minto and Thomas Allsworth, who have an identical 15.3% stake. These three parties control over 57% of the company’s shares, giving them significant voting power in any major corporate decision, including a potential sale.

Last year, Minto paid £2.9 million (US$3.6 million) to settle allegations that he had breached fiduciary duties. The fallout from the accounting issues tied to Minto led to a suspension of Revolution’s trading on the London Stock Exchange and triggered more significant board-level changes.

Boohoo previously exerted influence over the company’s leadership. In 2023, it successfully pushed for the removal of then-CEO Bob Holt following boardroom tensions and disagreements over strategy.Revolution Beauty continues exploring strategic options amid financial instability.

Financial struggles

The possible acquisition interest comes as Revolution Beauty faces a turbulent financial landscape. Last month, the company revealed a 26% year-on-year drop in sales to £141.6 million (US$189 million), down from £191.3 million (US$255.4 million) the previous year.

It blamed the sales fall on a smaller product portfolio and “softness in the US market and on digital channels.”

Revolution Beauty has warned of ongoing funding pressure, as its £32 million (US$42.9 million) revolving credit facility (loan) expires in October.