- Next is in talks to sell Reiss, the fashion chain it owns, for over £500 million.
- The auction, managed by investment bank Raymond James, is in its second round.
- Reiss has the potential for significant growth and expansion in the US market.
Reiss’ shareholders are working with the investment bank Raymond James on an auction of the fashion chain founded by David Reiss in 1971.
The high street clothing giant Next is in talks to sell Reiss, the fashion chain it owns, in a transaction that could be worth over £500 million.
Next and its companion Reiss shareholder, Warburg Pincus, is working with bankers to conduct an auction of the 1971-founded company.
Raymond James, the investment bank, is in charge of managing the sale.
Tuesday, according to city sources, the auction was in its second round, with several bidders circling.
According to the sources, Reiss could be valued at over £500 million based on expected earnings before interest, taxes, depreciation, and amortization of nearly £65 million for the current fiscal year.
It was unclear who Reiss’ suitors were.
A Next insider expressed doubt that the company would ultimately sell its 51% stake, while a senior retail executive speculated that it may use the process to establish a market price before acquiring Warburg Pincus’ remaining stake.
According to a source, Raymond James is believed to be soliciting proposals for the entire share capital of Reiss, although Next could choose to retain its 51 percent stake alongside a new equity investor.
If it decided to sell its shares, it would be a significant step for Next, which is led by Lord Wolfson, its chief executive.
Under his lengthy stewardship, Next has also delivered impressive shareholder returns and transformed into Britain’s largest clothing retailer.
In recent years, it has diversified through the acquisition of several distressed retail brands, frequently competing with billionaire Mike Ashley to acquire failing retailers.
It has formed joint ventures with companies such as Victoria’s Secret and Gap UK, while acquiring JoJo Maman Bebe and Joules from Davidson Kempner and the hedge fund Davidson Kempner, respectively.
In a time when traditional competitors such as Arcadia Group and Debenhams have collapsed into insolvency, the company’s robust balance sheet has enabled it to negotiate with landlords with considerable leverage.
It invested £33 million in Warburg Pincus shares to buy 25% of Reiss in 2021.
In the summer of 2012, it exercised an option to acquire majority control of the chain by acquiring an additional 26% of its shares.
Lord Wolfson characterized Reiss as “an outstanding brand with enormous potential” at the time of the original deal.
Reiss moved its online operations to Next’s Total Platform, which manages e-commerce logistics and sales for smaller shops.
The affordable luxury fashion chain operates more than 60 stores in the United Kingdom and intends to triple its seven-store presence in the United States over the next few years.
It sells men’s and women’s clothes in Selfridges and Bloomingdale’s.
Following that, both Warburg Pincus and Raymond James declined to comment.
