Lessons of the Non-Tech Acquiring Tech Deal Of The Month

January 2021: Boohoo acquires Debenhams for £55 million

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On 25 January 2021, the online fashion retailer, Boohoo, announced the acquisition of certain assets (brand and IP) of the UK-based department store chain operator, Debenhams, for £55 million ($75 million).


Founded in 2006, Boohoo is a leading online fashion retailer selling clothing and accessories to over 17 million customers worldwide. As of August 2020, the company reported LTM sales of $1.9 billion and EBITDA of $186 million.

Recently, Boohoo has been strategically expanding its product offering beyond its own-brand clothing and accessories. The company’s seven acquisitions of fashion brands from 2017 to early 2021 – PrettyLittleThing, Nasty Gal, Misspap, Karen Millen, Coast, Warehouse and Oasis – have helped transform the company into a leading multi-brand e-commerce platform.


Founded in 1778, Debenhams was a leading UK-based operator of department store chains. The company, through its online shopping portal and line of retail outlets, offered a broad range of apparel, cosmetics, electrical appliances, beauty care, home furnishings and gift items from diverse international and concession brands. As of August 2020, the company reported FY sales of $1.9 billion(1),(2),(3) and EBITDA of $16 million(2),(3).

Debenhams entered a liquidation process in December 2020. Like many other high street retailers globally, the pandemic and ensuing lockdowns proved to be too much for a company that had already been struggling for years with the advent of online shopping. The company had previously entered administration in April 2020 and April 2019.


On 25 January 2021, Boohoo announced that it had acquired Debenham’s intellectual property assets, including the brand, the customer data and related business information, as well as selected contracts. The transaction excludes Debenham’s 12,000 employees and, most notably, all of the target’s once highly coveted high street retail outlet locations.

This deal is yet another recent “reverse Techquisition”, in which tech companies acquire traditional, non-tech companies. This is a trend we first noted during our analysis of Peloton’s acquisition of Precor last month, which has been particularly noticeable in the retail industry.

The accelerated shift to an “online life”, forced upon so many by the global pandemic and national lockdowns, has seemingly been the final nail in the coffin for legacy retail groups, which were already struggling to compete with shifting consumer preferences and the rise of e-commerce.

This death of high street retail has been the case with J. Crew, JC Penney and Marcus Neiman in the US, and the Arcadia Group in the UK (which also entered administration in November 2020).

In fact, just one week after the Boohoo acquisition, online retailer, Asos, announced it would be acquiring Arcadia’s four main brands – Topshop, Topman, Miss Selfridge and HIIT – for a total consideration of ca $450 million(4).

Similar to the Boohoo deal, the transaction does not involve any of the group’s 70 stores, and only about 300 of Arcadia’s 13,000 employees are expected to be transferred to Asos, mostly in design and production related roles.


Online retailers like Boohoo and Asos have thrived during the pandemic, gaining market share from traditional retail players who struggled after being forced to shut down their primary customer channel – physical stores.

In addition to being better equipped to handle this structural industry shift, the online retailers built agile supply chains to be able to adapt to shifting consumer preferences, namely the substitution of office wear for home attires and loungewear, and quickly adjust their product offering accordingly.

However, despite its precarious financial situation, a legacy player such as Debenhams still has significant assets – such as brand power and recognition, intellectual property and customer data (prior to the acquisition, Debenhams was a top 10 retail website in the UK by traffic with 300 million yearly website visits) – which, if properly leveraged through a lean, efficient business model such as that of a pure online retailer, can result in significant value creation.

For Boohoo, the acquisition of Debenhams assets should allow it to significantly expand into new market segments. It will immediately enter the beauty market at scale, by acquiring a leading national beauty retailer (#2 in prestige beauty, #1 in makeup and #2 in skincare) with a large and growing online market and 6 million existing customers in the sector (as well as 1.4 million members in the Beauty Club loyalty scheme).

Acquiring Debenhams also provides the opportunity to extend partnerships into new categories, such as sports and homeware.

The transaction should also allow Boohoo to fully unlock the combined online potential of both brands by establishing the UK’s largest marketplace across fashion, beauty, sports and homeware.

Boohoo can leverage Debenham’s pureplay brands and existing third-party relationships as the foundation for the marketplace, developing and expanding these relationships over time, while simultaneously using this channel to market its own properties and take advantage of the target’s established audience to capture market share.

In addition, Boohoo will be acquiring 3 UK fulfilment centres shipping internationally, which will increase its capacity and allow it to better meet customer demand.

Finally, the acquisition of Debenhams’ assets provides several avenues for Boohoo to increase its sales:

  • It will be able to leverage the company’s customer base and data (top 10 UK retail website, with 300 million yearly visits), as well as its brand name (1.8 million social media followers, 90% brand awareness) to increase reach in its home market and develop its international platform for the future
  • The acquisition provides an additional route to market (Debenhams.com) for Boohoo’s existing fashion brands, newly acquired brands and third-party beauty brands, and launch into sports and homeware, grow Debenhams’ product categories and expand supplier relationships
  • It will extend its brand portfolio through the acquisition of pureplay Debenham brands such as Maine, Mantaray, Principles and Faith

Given the potentially transformative synergies associated with the transaction, as well as the discounted acquisition price, it comes as no surprise that the market reacted favourably to the announcement.

By the end of the acquisition announcement’s trading day, the Boohoo share price increased by approximately 4% compared to a decrease of approximately 1% in the FTSE 100, implying an addition of a net $250 million to Boohoo’s market capitalisation.

Calculated on this basis, the deal not only paid for itself but also added approximately $180 million in shareholder value – over 2x the purchase price – effectively overnight.

Additionally, the nature of these recent acquisitions, where companies such as Boohoo and Asos acquire its competitors’ IP and customer data, but not its stores and employees, is further proof that BodyValue (a company’s Enterprise Value divided by its employee count) is becoming an increasingly relevant valuation metric for these companies.

For reference, Boohoo currently has a BodyValue of ca. $2m, which is 28x higher than Debenham’s BodyValue was back in May 2014, when its EV was at its highest.

In essence, this means that the market considers a Boohoo employee to be worth 28 times more now than a Debenhams employee’s maximum value has ever been over the last 10 years.

BodyValue as at 3 Feb 2021 for Boohoo, Asos; as at 9 May 2014 for Debenhams


The acquisition represents an exciting strategic opportunity to transform our target addressable market through the creation of an online marketplace that leverages Debenhams’ high brand awareness and traffic (…)

– John Lyttle, CEO of Boohoo

Boohoo’s acquisition of Debenhams is an extremely interesting example of a phenomenon we like to call a Reverse Techquisition, whereby a tech company acquires a non-tech established company to increase its capabilities, scale its operations and deliver greater value to its shareholders and customers, such as Amazon did with Whole Foods, or as Peloton did with Precor.

The essence of such a transformation unfolding is embedded in a strategy execution methodology we have trademarked and call Techquisition, which my firm, Aquaa Partners, designed and delivers to its clients as an experienced and trusted partner.

Source(s): Aquaa Partners, company websites, Financial Times, BBC, Bloomberg, Pitchbook, OFX

Note(s): PitchBook as of 4 Feb 2021, unless otherwise stated; (1) Gross Transaction Value; (2) Unaudited, as per Boohoo’s press release; (3) Converted at average GBP / USD FX rate for the period between September 2019 and August 2020 of 1.271; (4) Converted at GBP / USD FX rate of 1.368 as at 1 February 2021; (5) As at FYE February 2020 for Boohoo, as at FYE August 2020 for Asos

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