‘It will take more than delisting and taking the business private to transform N Brown’

As take-privates go, the sale of home shopping group N Brown is unlikely to prove controversial.

The 40p-per-share cash offer values N Brown at £191m and comes at a hefty premium on a variety of metrics, so shareholders beyond the Alliance family who built the business will no doubt be satisfied.

There actually aren’t many of them. The recommended offer for the retailer from Falcon 24 Topco is being fronted by Joshua Alliance. He’s been a non-executive director since 2020 and owned or controlled 6.6% of N Brown’s stock. Altogether the Alliance family held another 53.4%.

While N Brown may now formally be going private, in many respects it already was.

While it may be giving up its stake in N Brown, Frasers’ interest in the business is ongoing

There is one very important external investor – tycoon Mike Ashley’s Frasers Group holds 20% of N Brown. Frasers has signalled though that it will happily sell its stake. (Other retailers in which it has positions may like to take note of how successfully Ashley’s business was communicated within the process by the buyer. Frasers said it would “like to take the opportunity to thank N Brown and Joshua Alliance for the fulsome engagement ahead of the acquisition announcement”.)

While it may be giving up its stake in N Brown, Frasers’ interest in the business is ongoing. The department stores, sports and branded goods group said it “looks forward to a strategic relationship with Joshua Alliance and the N Brown team post-acquisition”.

It’s an intriguing comment, and shows that, in the end, the success of N Brown – which owns businesses including JD Williams, Simply Be and Jacomo, as well as a substantial financial services division providing customer credit – won’t be down to whether it is a private or publicly listed company. Rather it will depend on how effectively its strategy and transformation programme are.

By its own account, N Brown is missing many of its key targets. This month’s results for instance showed that a raft of such measures, ranging from website sessions to total orders, were down, while active customer numbers slid 10.5%.

Yes, N Brown returned to profit in its last full year and at the interims flagged “year-on-year progression” as it took sensible steps such as focusing on profitable sales. However, the business has been a bit of a plodder for a while now.

Even taking into account the savings that will be made by not needing to tick the multitude of boxes that come with being a public company, it doesn’t sound on the face of it that much will change at N Brown

Joshua Alliance has confidence in N Brown’s management team and existing strategy, which begs the question of what will be different when it becomes a private company?

He believes Falcon can “support N Brown in accelerating its long-term growth potential… and provide, where needed, access to additional capital, expertise and resource to accelerate the longer-term potential of the business”.

To be honest, even taking into account the savings that will be made by not needing to tick the multitude of boxes that come with being a public company, it doesn’t sound on the face of it that much will change at N Brown.

But then there’s that hint from Frasers that it will work in some way with N Brown. Joshua Alliance too brings a different type of experience to the retailer. While he originally joined N Brown in 2014, he also has “experience working in other developing hi-tech businesses”.

N Brown may not be the most exciting retailer, but it’s by no means a basket case either. Whether it could have stepped up the pace of change as a public company is academic, but there are certainly levers to be pulled that could enhance success.

It’s goodbye to the stock exchange and good luck to the owners as it prepares for a new phase. But it will take more than going private to transform the business.