As reported, ABG is set to acquire the entire issued, and to be issued, share capital of Ted Baker for 110 pence in cash, or around 211 million pounds, or $254 million. The price is one-third lower than the 160 pence-a-share that Ted Baker had wanted.
The deal is expected to be completed in the fourth quarter of this year.
In a filing to the London Stock Exchange on Tuesday, Ted Baker noted that ABG paid an 18 percent premium to the 93.1 pence share price at close of business on Monday, the last business day before the announcement.
Jamie Salter, founder, chairman and chief executive officer of ABG, described Ted Baker as a “highly regarded, uniquely British brand whose strong fashion credibility resonates with consumers around the world.”
He added that ABG is “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.”
Helena Feltham, interim chair of Ted Baker, said the offer “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.”
She added that the Ted Baker board believes “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.”
As reported in April, Ted Baker put itself up for sale after receiving a clutch of unsolicited bid proposals. ABG was always a front-runner, and sealed Tuesday’s deal after months of on-again, off-again negotiations.
Sources said ABG was close to purchasing Ted Baker earlier this year, but walked away in June after its due diligence revealed the financials were not what it had expected.
“It was messy, and they had to adjust the purchase price for it to make sense,” one source close to the negotiations said.
When Ted Baker put itself up for sale there were a number of interested parties, including Sycamore Partners, Bluestar Alliance and ABG. In late May, Ted Baker said it had selected its “preferred counter party” to pursue further due diligence and confirmed that Sycamore was no longer participating.
Ted Baker was founded by Ray Kelvin in 1987, and for decades was a recognizable brand on the British high street. Its strong following and online community loved the quirky, colorful take on the season’s trends.
However, the past few years haven’t been easy for the brand.
Kelvin resigned in 2019 amid staff complaints about inappropriate physical contact (which he always denied), and the company went on to face a series of crises. In the subsequent years, it posted a string of profit warnings and suffered accounting and management troubles.
In 2020, Rachel Osborne was promoted to the role of CEO. Formerly Ted Baker’s chief financial officer, she was the third person in 12 months to hold the top role at the company. She has steadily been making improvements.
In Tuesday’s statement to the London Stock Exchange, ABG said it “will be a good custodian of the Ted Baker brand and is well positioned to accelerate Ted Baker’s growth and enhance its value.”
ABG operates worldwide and recently finalized its 2.1 billion euro purchase of Reebok and partnered with David Beckham to co-own and manage his business.
It also owns Brooks Brothers, Nautica and a number of other high-profile brands as well as the rights to personalities ranging from Marilyn Monroe to Muhammad Ali. ABG’s value now exceeds $21 billion as measured by annual retail sales.
The company said Tuesday it intends to use its global network of established operating partners and industry expertise “to enhance Ted Baker‘s revenue and profitability across merchandise categories and geographic regions” as it has for Reebok, Brooks Brothers, Nautica and Eddie Bauer.
ABG added that Ted Baker is better suited to private ownership, “as this will facilitate a restructuring of the business in order to maximize its future potential.”
After the completion of the purchase of Ted Baker, ABG said it plans to separate the business into an intellectual property holding company to be controlled by ABG, and one or more operating companies that would manage Ted Baker’s physical retail, e-commerce and wholesale operations. This is the same playbook ABG has followed with other acquisitions it has made.
ABG said it will also “explore options” regarding the transfer of full, or partial, ownership and control of some, or all, of those future operating companies to partners with established operating businesses.
ABG said there are “significant growth opportunities” for Ted Baker in North America given the brand’s “strong consumer recognition in this market.”
In order to accelerate growth and provide operating economies of scale, ABG added that one of its options is to enter into formal discussions about combining Ted Baker’s operations in North America with those of SPARC.
ABG owns 50 percent of SPARC Group LLC, a North American retail, e-commerce and wholesale operating joint venture alongside Simon Property Group.
SPARC operates about 1,660 stores in North America and has substantial e-commerce and wholesale activities.