INSIDE THE DEAL
ABG agrees GBP211m deal to acquire Ted Baker
François Locoh-Donou, president and CEO of F5. Credit: F5
A newly-formed entity of Authentic Brands Group has acquired Ted Baker for GBP211m (US$253.5m) in a move analysts say could give the UK fashion brand the stability it needs to turn its fortunes around.
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ABG, which completed its acquisition of sportswear brand Reebok in March, has agreed a 110 pence per share deal to buy Ted Baker through ABG-Robin BidCo (UK) Limited – a newly incorporated entity wholly-owned by ABG.
Ted Baker said its directors consider the terms of the deal to be “fair and reasonable” and are recommending shareholders vote in favour.
The company began a formal sales process in April after rejecting several bids from private equity group Sycamore Partners. In June, Ted Baker said a preferred suitor had backed out of a potential deal.
In May, Ted Baker reported a pre-tax loss of GBP38.4m for the year to 30 January, down from GBP59.2m the year before.
Helena Feltham, interim chair of Ted Baker, said: “The Ted Baker board believes that ABG will be a strong and supportive owner of the business. We are confident that with ABG’s experience, reach and investment, the Ted Baker brand will be capable of achieving its long-term global potential.”
ABG plans to separate the Ted Baker business into an intellectual property holding company, and one or more operating companies which would manage the physical retail, e-commerce and wholesale operations.
“Ted Baker is a highly regarded, uniquely British brand whose strong fashion credibility resonates with consumers around the world,” says Jamie Salter, CEO of ABG. “We are excited to build on the brand’s global foundation through a business model focused on licensing, wholesale, retail, digital and strategic marketing partnerships. Under ABG’s ownership, we believe that Ted Baker is poised for continued growth and success.”
With Ted Baker, ABG said it intends to use its global network of established operating partners, together with its business model, to enhance Ted Baker’s revenue and profitability across merchandise categories and geographic regions as it has done for other acquired brands.
ABG believes there are significant growth opportunities for the Ted Baker brand in North America given its strong consumer recognition in the market.
ABG owns 50% of SPARC Group – a North American retail, e-commerce and wholesale operating joint venture alongside Simon Property Group, a leading owner and operator of regional shopping malls and outlet centres in North America.
While detailed intentions and plans have not yet been formulated, in order to accelerate growth and provide operating economies of scale, one of the options ABG may explore is the potential to enter formal discussions to seek to combine Ted Baker operations in North America with those of SPARC.
Emily Salter, senior apparel analyst at GlobalData, believes the acquisition will give Ted Baker the stability it needs to turn its fortunes around.
“Even before the pandemic, Ted Baker was suffering as its distinctive brand handwriting limits its audience, and Covid only compounded its troubles. It fell victim to the lack of demand for occasionwear and formalwear in 2020 and 2021, and although occasionwear is popular again with the return of weddings and other long-postponed events, Ted Baker has not adapted to the long-term casualisation trend. This is vital for Authentic Brands Group to tackle to ensure that it regains relevance among shoppers.”
Main image credit: TY Lim / Shutterstock.com
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