- Authentic Brands buys embattled retailer for £211 million
- Takeout price below the 160p touted earlier this year
- New owner sees significant growth opportunities in North America
Shares in Ted Baker (TED) jumped 17% to 108.8p after the quirky British fashion label recommended a cut-price £211 million takeover by Reebok owner Authentic Brands, bringing a protracted formal sales process to an end.
New York-based Authentic Brands will pay 110p in cash for each Ted Baker share, less than the 160p touted earlier this year, though still a decent 18.2% premium to the retailer’s 93.1p closing price on Monday. The takeover is expected to complete during the fourth quarter of 2022.
FAIR VALUE
Struggling Ted Baker put itself up for sale back in April after receiving a number of unsolicited takeover bids and the formal sale process attracted global interest in the challenged clothing and accessories seller.
‘The Ted Baker board believes the offer, which is supported by Ted Baker shareholders with a majority of shares, represents a fair value for shareholders and balances the company’s growth prospects with the risks of the uncertain economic environment in which the business is operating,’ explained Ted Baker’s interim chair Helena Feltham.
She added: ‘The Ted Baker board believes that Authentic Brands will be a strong and supportive owner of the business. We are confident that with Authentic Brand’s experience, reach and investment, the Ted Baker brand will be capable of achieving its long-term global potential.’
Authentic Brands, which bought Reebok from Adidas (ADS:ETR) earlier this year in a deal worth up to €2.1 billion and also owns the likes of Nautica, Eddie Bauer, Spyder, David Beckham and Sports Illustrated, believes that Ted Baker is better suited to private ownership ‘as this will facilitate a restructuring of the business in order to maximise its future potential’.
The new owner has also identified significant growth opportunities for the business in North America ‘given the Ted Baker brand’s strong consumer recognition in this market’.
THE EXPERT’S VIEW
‘It’s been a torrid time for fashion retailer Ted Baker but beneath all the scandals and soggy trading performance there is clearly some value remaining in the brand,’ commented AJ Bell financial analyst Danni Hewson.
‘Authentic Brands, which previously purchased Reebok among other names, clearly thinks so as it swoops for the business in a cut-price deal.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Steven Frazer) own shares in AJ Bell.
