Reebok and Forever 21 owner Authentic Brands snaps up Ted Baker in £211m deal
After months of speculation, the Reebok and Forever 21 owner Authentic Brands (ABG) has said it will buy Ted Baker for an estimated £211m.
The price of 110p per Ted Baker Share represents a premium of approximately 18.2 per cent to Ted Baker’s share price of 93.10 pence at close yesterday, with the stock having rallied from just over 69p in early July.
The struggling British retailer had put itself up for sale in April, and agreed with a suitor to take the process forward a month later.
However, reports circulated in June that this suitor, which was rumoured to be Authentic Brands, would not to make an offer.
Today’s offer is notably a third lower than the roughly 160p-a-share price that ABG was preparing to offer as recently as May.
The reduced price that ABG appears to be willing to pay for one of Britain’s best-known retailers exposes gloomy sentiment towards high street brands, in an economy being hammered by inflation amid fears of an impending recession.
The directors of Ted Baker have nevertheless been advised by Evercore and Blackdown to back the deal and shareholders are expected to recommend.
Commenting on the deal, AJ Bell financial analyst Danni Hewson said it had been a “torrid time” for the fashion retailer but said “beneath all the scandals and sorry trading performance there is clearly some value remaining in the brand”.
Ted Baker was at the centre of scandal in 2018 amid after reports that it nurtured a culture of “forced hugs” under its founder, Ray Kelvin. Kelvin went on to exit the company.
However, Hewson added: “US Authentic Brands Group, which previously purchased Reebok among other names, clearly thinks the brand has something to offer as it has decided to swoop for the business in a cut-price deal.”
Meanwhile, ABG has been valued at nearly $13bn under the watch of businessman Jamie Salter, and following the sale of “significant equity stakes” to CVC Capital Partners, the Six Nations Rugby shareholder, and HPS Investment Partners.
Its valuation has soared in recent years, after reportedly selling a controlling stake in August 2019 to a division of BlackRock, the world’s biggest asset manager for $870m.