Silverwood Brands PLC (AQSE:SLWD) has rejected the reasons given by Lush Cosmetics as to why it blocked the investment company’s acquisition of a 19.8% stake in the retailer.
Lush declined to record Silverwood’s December acquisition on the grounds that it was not in accordance with its articles of association.
Silverwood said in a statement today that it "rejects the reasons given by Lush management and, alongside Cosmic Circles, it has instructed solicitors to take up the issues with Lush".
The investment company, where Lush co-founder Andrew Gerrie is an executive director, bought the 19.8% stake in each of Lush and Cosmetic Warriors Ltd from Gerrie and his wife Alison Hawksley for £216.8mln of Silverwood shares priced at 95p per share.
Lush said in a statement on 3 March that it communicated its rejection of the transfer of shares and the Lush board's reasoning to Gerrie and Hawksley on 14 February, saying 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 was "not permissible" and the price paid for the shares "is required to be paid in cash".
Furthermore, it said the value of the shares issued to Gerrie and Hawksley was "not the same as or more than the prescribed price required under the articles".
On Silverwood's assertion that the refusal to record the transfer is unethical and prejudiced towards minority shareholders, the Lush directors "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".
Silverwood said today that it wants a “constructive and open dialogue with the Lush management team so that all matters can be resolved”.