retail

Ted Baker recommends cut-price takeover offer from Authentic Brands

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Ted Baker has recommended a cut-price takeover offer from US group Authentic Brands of £211mn despite the UK fashion brand’s rejection of previous approaches at higher valuations as “inadequate”.

Authentic Brands, a US group that owns businesses including Reebok, Nautica and Eddie Bauer, is offering 110p a share in cash for the retailer, which just four years ago was capitalised at more than £1bn.

Shares in Ted Baker rose 16 per cent on Tuesday morning.

Directors of the UK group said the bid represented fair value and “balances the company’s growth prospects with the risks of the uncertain economic environment”, including the potential for an extended UK recession.

Authentic Brands cautioned that it could not rule out store closures and headcount reductions at the company.

The offer was supported by a majority of Ted Baker’s shareholders, including founder Ray Kelvin, value investor Toscafund and fund managers Schroders and Oasis, who together account for 50.7 per cent of the capital.

Kelvin, in his first public statement since being forced out of the company in 2019, said he was “unsure if Ted Baker is still the company I once knew” but expressed hope that “under new ownership it will regain its identity”.

Kelvin was ousted after employees complained about inappropriate conduct, including a “forced hugging” policy — allegations he has always denied.

People close to him said he was unhappy about the design direction taken under new management, although he has ruled out returning to the company in private ownership.

But he did hint at a future return to fashion, saying that “as hard as leaving Ted has been, to this day I feel the same passion for design and product to do it all again”.

The formal sale process began in April after Ted Baker rejected an approach from private equity group Sycamore at 137p a share.

Authentic Brands was at one stage the company’s preferred bidder, but ended its interest due to the “deterioration in the wider macroeconomic environment”.

Ted Baker and its advisers resumed discussions with other parties but Authentic Brands subsequently submitted a revised proposal deemed “the most attractive and deliverable proposal for Ted Baker and its shareholders”.

It represents a premium of 18 per cent to Monday’s closing price, and 11 per cent over the share price before the takeover process began.

Authentic Brands described Ted Baker as “a distinctive British lifestyle brand” and said it would split the group into an intellectual property holding company under its control and various retail, wholesale and ecommerce operating divisions that could be transferred or sold to partners.

Although Authentic Brands stressed it intended to maintain Ted Baker’s London headquarters and store estate “the evolving macroeconomic situation” meant it “may need to be agile”, which could mean reviewing store numbers and head office headcount.

It said there were “significant growth opportunities” for the brand in North America, where Authentic Brands owns half of a joint venture with mall owner Simon Property Group.

The takeover comes a quarter of a century after Ted Baker floated on the London market and completes a corporate fall from grace that began with the allegations about Kelvin.

Longtime finance director Lindsay Page left less than a year after taking over from Kelvin as chief executive, following falling sales and the discovery of accounting errors. The company was then hit by extended closures of stores and concessions because of the pandemic.

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