New York-based private equity group Sycamore Partners is considering a bid for British clothing company Ted Baker, sending the fashion chain’s shares skyrocketing.
Sycamore, which specializes in investing in retail and consumer companies, said in a statement on Friday that it was “in the early stages of considering a possible cash offer for Ted Baker,” although it added that “there is no certainty.” that an offer will eventually be made”.
The company has until April 15 to decide whether to bid. Sycamore has invested about $10 billion in equity in companies including US office supplies group Staples.
Ted Baker said in response that “it has not received any communications from Sycamore,” adding that its board is “confident in the company’s independent prospects.”
“The board . . . would evaluate each offer to the company based on the strong shareholder value it believes can be delivered as a standalone company,” the company said in a statement.
Shares of Ted Baker rose about a fifth in early London trade on Friday, pushing its gains into positive territory for the year as analysts hailed the possibility of the buy.
“It looks like someone might be able to end Ted Baker’s horrendous time as a public company,” said Russ Mold, investment director at AJ Bell, noting that the company’s stock price fell halfway between September 2021 and February this year has lost value.
Ted Baker, which had a market cap of approximately $180 million prior to the publication of the offering.
Losses skyrocketed, forcing the retailer to respond with heavy discounts. Revenue started to pick up again last year and the company posted sales of $199.3 million in the 28 weeks ended August.
“[The latest figures are] encouraging, but the market has yet to be convinced of the numbers, so Sycamore needs to have a lot of confidence in the company’s turnaround potential,” Mold said.
He added that households are grappling with it rising inflation and cost of living could face significant headwinds for retailers going forward.
Ted Baker appointed Rachel Osborne as chief executive in 2020 and embarked on a turnaround plan after a series of profit warnings. Since then, the company has focused on refreshing its brand, known for its formal wear, and has worked to strengthen its online presence. A pandemic-driven shift in clothing tastes has resulted in her offering more casual options.
Sarah Riding, retail and supply chain partner at law firm Gowling WLG, said that while a sale is not yet certain, Sycamore’s interest suggests opportunities for overseas expansion.
Ted Baker was founded in 1988 by Ray Kelvin who drove the company to annual sales of £640m at its peak with a valuation of £1.4bn.
Kelvin resigned in 2019 after allegations of improper conduct, which he denied, but he still plays an advisory role at the company by arrangement signed in 2020.
Numis Securities is acting as financial advisor to Sycamore on the potential transaction.
https://www.ft.com/content/43857f05-4079-4a07-8498-c41674f0639f Sycamore considers bid for British fashion group Ted Baker