Two British beauty groups had big news on Thursday with the boards of Warpaint London and of Brand Architekts saying they’ve “reached agreement on the terms and conditions of a recommended cash offer to be made by Warpaint for the… share capital of Brand Architekts”.

Brand Architekts shareholders will be entitled to receive 48p in cash for each share they hold. The deal values Brand Architekts at £13.88 million and represents a premium of around 100% to the closing price its shares on 4 December.

It’s also over 85% higher than the average price of the shares for the three-month period leading up to 4 December.

Eligible Brand Architekts shareholders can also elect to receive 0.0916 new Warpaint shares for each Brand Architekts share they hold instead of the cash offer. Warpaint has received irrevocable undertakings to vote in favour of the deal in relation to 31.35% of Brand Architekts shares.

As for the reasons behind the deal, Warpaint said: “Having followed Brand Architekts for some time, as another company admitted to trading on AIM operating in a similar sector, the board believes that the acquisition at this time is an exciting and relatively low-risk opportunity to further bolster growth opportunities”.

It added that it has “a strong track record of successfully acquiring, integrating and growing businesses with complementary brands, offerings and customers”.

It also said Brand Architekts has grown its gross margins over recent financial periods, but “it carries a high overhead cost base relative to the level of gross profit generated by the business” and its proposed new owner sees big opportunities for cost savings from synergies, “which should increase Brand Architekts’ profitability”.

Warpaint also on Thursday announced a share placing intended to raise £14 million that will represent approximately 3.53% of the existing issued ordinary share capital of the company. The issue price is at a discount of around 2.67% to the closing mid-market price of 524p on 4 December.

And in a trading update, it added that positive business momentum had continued in the second half with results for the full year ended 31 December to be in line with its expectations.

Trading in the US has been particularly strong in H2, benefitting from an initial order from Walmart for both W7 and Chit Chat products. It expects to report US revenue growth of around 20% for the year (in US dollar terms) at a significantly higher margin to that achieved in 2023, following the reduced focus on deep discounters. “Constructive talks are ongoing with Walmart regarding  the supply of all year round and gifting ranges for 2025”.

The group’s gross margin for 2024 as a whole is expected to be comfortably above the level achieved last year, which was 39.9%.

Looking forward to 2025, in the UK, Superdrug is expected to rollout W7 colour cosmetics into a significant number of new stores, and is in talks to roll out accessories into several hundred stores. In Tesco, confirmation of a 150-store expansion of the W7 impluse offering during 2025 has been received. Additionally, Boots has agreed to take a number of gifting products for the first time for Christmas 2025, which will be stocked in several hundred stores.

After a successful launch of W7 product into Etos in the Netherlands at the end of 2023, Warpaint has received confirmation of an expansion of the product assortment in all Etos stores, and the roll out of a ‘back wall’ fixture with an enhanced product range is now taking place.

The company is also in talks with other large new retailers in Europe, the US and the UK with a view to stock the group’s products.