UK online retailer Boohoo has confirmed it has started a sale process to acquire certain intellectual property assets from US-based retailer Nasty Gal for £16.2 million.
Pending US court approval on January 5, Boohoo subsidiary Boohoo F I Limited has been appointed as the “stalking horse” bidder for the Nasty Gal brand and customer databases, in accordance with Section 363 of the United States Bankruptcy Code3.
A “stalking horse” bid is a deal designed to test the market, ensuring that Nasty Gal receives the maximum amount of money for its assets once it officially goes to auction, which would consist of a court-approved bidding process lasting at least a month.
This means Boohoo‘s bid may not be successful if Nasty Gal receives higher or more favourable offers during this process.
The news comes after Nasty Gal filed for Chapter 11 bankruptcy in November, announcing it could not pay back its creditors.
Boohoo said Nasty Gal would “complement” its own brand and the deal would accelerate the Manchester-based retailer‘s international growth, especially in the US.
“Should we be successful in acquiring Nasty Gal it would represent a fantastic opportunity to add such a well-established, global brand to the Boohoo family,” Boohoo joint chief executives Mahmud Kamani and Carol Kane said.
In the year ending February 1 2016, Nasty Gal delivered net revenue of $77.1 million USD but made a net loss after tax of $21 million USD after operating costs.
In December, Boohoo acquired 66 per cent of young fashion brand PrettyLittleThing for £3.3 million.