Revolution Beauty Group PLC (AIM:REVB) settlement with former shareholder Chrysalis is likely to calm prospective investors' nerves over backing the make-up firm, analysts have said.
Revolution on Thursday said it had agreed to pay a “non-material sum” to Chrysalis to end a dispute that had seen the latter threaten a legal claim last year.
“We think this removes a significant risk that had previously stopped potential new investors in the shares,” Panmure Liberum analysts said in response.
Neither admitted liability under the deal, which put a lid on Chrysalis’ accusations of “misstatements” by Revolution over its previous investment in the beauty company.
“We believe this outcome draws a line in the sand for any similar claims as they are unlikely to be worthwhile,” analysts added.
Growth capital fund Chrysalis had taken a near-£40 million hit in late 2022 when it sold a £5.7 million stake in Revolution, bought the previous year for £45.0 million.
Panmure noted Chrysalis had been among Revolution’s largest investors at the time of its initial public offering in mid-2021 and that the end of the dispute made the latter’s investment case “much simpler”.
A ‘buy’ rating was set for Revolution by Panmure, alongside a 75p share price target.
Shares surged 15.1% to 15.8p on Thursday.