Best World eyes purchase of entire stake in British beauty firm Pedal Pulses

MAINBOARD-LISTED skincare products firm Best World International, which is facing a bourse probe over its sales model in China, is looking to acquire up to 100 per cent of the shares in UK-based Pedal Pulses, which sells products and treatments for feet, hands and legs.

Best World and its wholly-owned subsidiary, Best World Investments Pte Ltd (BWIPL), on April 3 inked a sale and purchase agreement with Pedal Pulses' three shareholders: Margaret Dabbs, Ian Richardson and Jonathan Day. Both companies also entered into a put and call option agreement and a shareholders' agreement with Ms Dabbs and Mr Richardson.

Under these three transaction documents, Best World will guarantee the obligations of BWIPL, it disclosed in a bourse filing on Friday night.

BWIPL has acquired a 49.9 per cent stake in Pedal Pulses for about £13.9 million (S$24.6 million) in cash, to be funded with internal resources, under the deal's first tranche which was completed on Friday.

For the second tranche, Ms Dabbs and Mr Richardson may sell and BWIPL may buy any amount of the remaining 50.1 per cent interest, comprising 348 shares or 30 per cent held by Ms Dabbs and 233 shares or 20.1 per cent held by Mr Richardson, by exercising put and/or call options.

The option price per share will be computed based on 13.7 times of the target group's Ebitda (earnings before interest, tax, depreciation and amortisation) plus net cash, divided by the total number of shares in issue at the date of the exercise of the put or call option.

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Ms Dabbs and Mr Richardson may exercise their put options to require BWIPL to purchase their shares during six-month periods starting from Nov 1, 2021. At the same time, BWIPL may exercise its call options to require both individuals to sell any of their shares during one-month periods starting from May 1, 2025.

Best World said it intends to fund the payment of the aggregate option price with its internal resources.

Pedal Pulses is a private company limited by shares incorporated in England and Wales, selling its products and treatments under Margaret Dabbs London, which is a direct-to-consumer British beauty brand.

Pedal Pulses is also the holding company of Margaret Dabbs Limited, Bare Feet Limited and Margaret Dabbs Europe Limited.

Pedal Pulses' retail component comprises Margaret Dabbs London products for feet, legs and hands, which are sold internationally.

Meanwhile, its treatment business operates a portfolio of Margaret Dabbs London clinics in the UK and internationally, providing podiatry and beauty services.

For the fiscal year ended Dec 31, 2019, the target group - comprising Pedal Pulses, Margaret Dabbs Limited, Bare Feet Limited and Margaret Dabbs Europe Limited - had net tangible assets of £3.5 million and a net asset value of £3.5 million.

As the target group is not publicly listed, there is no information on its open market value.

Best World said that no independent valuation of the target group's assets was conducted.

Prior to the proposed acquisition, Ms Dabbs held 50 per cent of the shares in Pedal Pulses, Mr Richardson owned a 45 per cent stake while Mr Day held 5 per cent.

Singapore-headquartered Best World, which distributes beauty, skincare and wellness products, on Friday said it is "constantly seeking opportunities to expand its geographical reach and product offerings", as part of the group's growth strategy.

It added that Pedal Pulses' products and services complement its business.

"The proposed acquisition will provide the group with a premium beauty brand specialist established in the United Kingdom and Europe," Beauty World said on Friday.

Best World also plans to use Pedal Pulses as a platform to sell its products to the UK and Europe, according to the bourse filing.

Best World said that the first tranche consideration of £13.9 million and the second tranche's option price were arrived at after arm's length negotiations between Best World and the three sellers.

They took into account, among other things, the competitiveness of the auction process, the strategic fit of the target group's business with Best World, the transaction multiples and the structuring of the deal as a partnership between Best World and the target group.

BWIPL is a holding company whose directors are also Best World's directors: Dora Hoan Beng Mui, Doreen Tan Nee Moi and Huang Ban Chin.

Separately, last month, Best World's independent accountant said the group may have understated sales and expenses relating to its China franchise business in 2018, with some 20 per cent of sales proceeds going into other bank accounts instead.

The nine-page interim preview from PricewaterhouseCoopers Advisory Services is part of a larger review into the financial affairs of the premium skincare products seller, after concerns were raised by The Business Times in February 2019 over its sales practices as well as that of its China franchisees.