The US business that owns Reebok and a portion of David Beckham’s clothing and goods empire has agreed to acquire Ted Baker for a discounted sum of £211m.
The board of the company, which has more than 500 stores and concessions worldwide, has recommended that shareholders approve Authentic Brands Group’s acquisition (ABG).
The 110p-per-share deal for the London-listed fashion firm, which has a market value of £167m, is far less than the 160p-per-share ABG was considering in May when other possible bidders were mulling over offers.
However, the deal’s worth is 18% greater than Monday’s closing price of Ted Baker’s shares, which are down 35% year-over-year.
The company’s board of directors deems the terms of the acquisition to be fair and reasonable, according to a statement released Tuesday. Accordingly, the board of directors intends to recommend unanimously that Ted Baker shareholders vote in favor.
Founder Ray Kelvin, who stepped down in 2019 over charges of “forced hugging” but retains an 11.5% investment in the company, stated, “I am dubious if Ted Baker is still the brand I once knew, but I hope it will restore its character under new ownership. At its foundation, Ted is a brand that was created out of love and passion for what we do.
It is believed that Kelvin will not be engaged in the privatized company, but he hinted at a future in fashion by stating, “As difficult as it was to leave Ted, I still feel the same enthusiasm for design and product to do it all over again.”
ABG has already obtained irrevocable commitments from shareholders representing 50.7% of Ted Baker’s issued share capital, including interests owned by the company’s directors and Kelvin.
After rejecting several bids from US private equity firm Sycamore Partners and others, the company initiated a formal sales process in April.
According to a stock market notice issued by Ted Baker at the beginning of June, “a preferred counterparty” that had been invited to do confirmatory due diligence no longer intended to make an offer.
ABG, which is valued at $13bn (£10.8bn) after selling significant interests to US private equity in recent years, has acquired Sports Illustrated magazine, Juicy Couture, and businesses linked with boxing and basketball legends Muhammad Ali and Shaquille O’Neal.
ABG intends to use its global network of established operating partners with deep industry expertise, along with its business model that combines leading brand management capabilities, to increase Ted Baker’s revenue and profitability across merchandise categories and geographic regions, as it has for other acquired brands such as Reebok, Brooks Brothers, Nautica, and Eddie Bauer,” the company announced on Tuesday.
“ABG feels that Ted Baker is better suited to private ownership, as this will permit a reorganization of the business to maximize its future potential.”
In May, Ted Baker reported a pre-tax loss of £38.4m for the year ending 30 January, a decrease from the previous year’s loss of £59.2m.
Shares of Ted Baker plummeted in 2018 due to challenging business conditions for apparel manufacturers and a scandal involving a culture of “forced hugs” under the company’s founder, Ray Kelvin, which led to his departure.
The business was then affected by the discovery of an accounting issue and a series of profit warnings.
Ted Baker is trying a turnaround under its new CEO, Rachel Osborne, who took over in 2020 after the Covid-19 outbreak negatively impacted its main market for suits and social attire.
