A row over the sale of a 20% stake in Lush has reignited today as the cosmetics giant hit back at claims made by a company led by its former chief executive.
Silverwood Brands, of which Andrew Gerrie is an executive director, announced in December last year it had bought 19.8% of Poole-headquartered Lush - payable in Silverwood shares. But last month Silverwood hit out at Lush for declining to complete the share deal.
In a new statement today, Lush said Silverwood had “erroneously” told its investors that Lush’s board had failed to provide reasons for not transferring its acquisition of Lush shares owned by Mr Gerrie and his wife Alison Hawksley. In response, Silverwood told BusinessLive it would continue to defend its position and would be 'a constructive, critical friend of Lush'.
In an update on the London Stock Exchange on February 20, Silverwood said it had received a notification from Lush declining to record the transfer of shares to its wholly owned subsidiary, Cosmic Circles, and solicitors had been instructed to seek further clarification from Lush.
Lush’s board had previously said in response it had "no choice" but to refuse the transfer, after it concluded the proposed sale was “not compliant” with its binding regulations on the sale of its shares.
In a fresh statement published on Monday (March 6) Lush said these rules were “well known” to Mr Gerrie and Ms Hawksley, and described Silverwood’s announcement last month as “misleading”.
Lush added that Mr Gerrie and Ms Hawksley had previously tried to transfer their shares to “another company they held a substantial interest in” in 2018, before later abandoning that transfer.
The firm said it had notified the pair of its decision on the attempted Silverwood acquisition on February 14, with the following reasons:
- 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) was not permissible;
- The price paid for the shares was required to be paid in cash;
- The value of the shares issued to Mr Gerrie and Ms Hawksley was not the same as or more than the prescribed price required under Lush’s articles of association.
Lush also said Silverwood had made suggestions that the refusal of the transfer was “unethical and prejudiced towards minority shareholders”.
In its February statement Silverwood previously said: “As a purported arbiter of fairness, ethics, and champion of environmental, social and governance issues, the company is surprised that Lush is behaving in this manner and expects that ultimately it will stand by their ethos and avoid potentially prejudicing minority interests.”
In response, Lush said: “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.”
A spokesperson from Silverwood today said: "Lush’s reasons for refusing to record the share transfers are entirely without merit."
It added: "We are comfortable with our position and will defend it vigorously. In the meantime, we have contractual power of control over the shares which protects our shareholders.
"Lush shares were valued by two independent expert firms and strict adherence to a fair and legally-sound 18-month process was followed throughout. The shares were offered to Lush’s existing shareholders at this fair price in Q4 2022 but they declined to buy them. Only then were the shares sold to Silverwood Brands.”
"We have raised concerns about Lush's treatment of minority shareholders, including its Employee Benefit Trusts, and will continue to advocate on their behalf. We aim to be a constructive, critical friend of Lush. There is a great future ahead for the company but we believe that improvements need to be made around governance to meet Lush’s ethical charter.”
Lush operates retail stores around 50 countries and has six manufacturing facilities, including its factory in Poole.
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