Boohoo share price will be watched today after media reports suggested that the company will acquire the Debenhams brand. The stock is trading at 332p, which is lower than the year-to-date high of 376p.
What’s happening: Debenhmans was once a leading fashion retailer in the UK that employed more than 12,000 people. Last month, the company went into administration after JD Sports decided not to acquire the company. Now, Boohoo could rescue the company as soon as this week, according to the Financial Times.
Still, the company’s employees face an uncertain future since Boohoo is only interested in Debenham’s e-commerce assets, which include Mantaray and Principles. The company is also interested in Debenham’s beauty business. The deal will value all these assets at about £50 billion. However, there is also a possibility that Frasers could mount a bid for some of the stores.
Is this a good deal for Boohoo: Boohoo share price will probably rise today if investors believe that the deal is a good one. For one, Debenhams applications and websites are among the most visited in the United Kingdom.
Also, the acquisition is relatively cheap and will help the company expand its business into the beauty and high-end fashion brand. Further, the deal will not have a major impact on Boohoo’s balance sheet, which had more than £569 million in assets.
Boohoo share price technical outlook
The daily chart below shows that Boohoo share price has formed an ascending channel that is shown in purple. The lower sides of the channel connects the lowest levels since December while the upper side connects the upper swings. On Friday, the BOO share price closed slightly above the lower side of the channel.
Therefore, I suspect that the shares will bounce back as investors target the upper side of this channel at 375p, which is 14% above the current level. However, a break below last week’s low at 316p will invalidate this trend.
Boohoo shares chart