3rd March 2023
Statement on Silverwood Brands Plc acquiring Lush shares
On 12 December 2022, Silverwood Brands Plc (“Silverwood”) publicly announced that it had conditionally acquired a 19.8% stake in Lush Cosmetics Ltd (“Lush”) and Cosmetic Warriors Ltd from Andrew Gerrie (formerly a director of Lush) and Alison Hawksley for £216.8m, with the consideration being satisfied by the issue and allotment of shares in Silverwood. Those shares amounted to circa 95% of the issued shares in Silverwood.
The Articles of Association of Lush contain various provisions which dictate how a transfer of shares is to take place and are binding on the company and its shareholders. Those provisions are well known to Gerrie/Hawksley. In 2018, Gerrie/Hawksley attempted to transfer their shares to another company they held a substantial interest in but subsequently abandoned the transfer.
On 15 December 2022 Gerrie/Hawksley gave notice to Lush that they had sold their shares to Silverwood (in respect of which Gerrie is a significant shareholder and Executive Director) and asked the board of directors to record the transfer. The directors of Lush are subject to a duty not to record the transfer of any shares unless the transfer is in accordance with the Articles. After careful consideration and based on the information provided, the directors declined to record the transfer on the grounds that the transfer was not in accordance with the Articles.
This decision was communicated to Gerrie/Hawksley on 14 February 2023, along with the reasons behind it. The grounds notified to Gerrie/Hawksley were as follows:
- The interests in the shares offered to Silverwood did not match those previously offered to the remaining shareholders.
- The separation of legal and beneficial interests in the shares as effected by the transfer (with the beneficial ownership being transferred to Silverwood and the legal ownership being transferred to a subsidiary of Silverwood) is not permissible.
- The price paid for the shares is required to be paid in cash.
- The value of the shares issued to Gerrie/Hawksley was not the same as or more than the Prescribed Price required under the Articles.
On 20 February 2023, Silverwood publicly announced that Lush had declined to record the transfer and, erroneously, that it had not received reasons. Lush considers that announcement to have been, and continues to be, misleading.
In addition, Silverwood and its advisers publicly asserted that the refusal of the Lush board of directors to record the transfer of shares is unethical and prejudiced towards minority shareholders. The Lush board entirely reject this characterisation of its decision, which was arrived at after very careful consideration and in keeping with the high standards of governance and ethics to which the company holds itself and has referred this view to Silverwood’s Regulators.