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ABG and Ted Baker Confirm $254 Million Deal But Rival Could Still Swoop In

Ted Baker is poised to become Authentic Brands Group’s latest win, and the New York brand management empire has already mapped out a pretty familiar playbook for the British high-street fashion retailer.

The contemporary brand on Tuesday said it asked shareholders to greenlight Authentic Brands Group’s (ABG) 211 million pound ($254 million) plan to purchase the struggling firm, confirming Monday’s report.

ABG arranged the all-cash deal through its newly incorporated, wholly owned entity ABG-Robin BidCo (UK) Limited under a British regulation that requires 75 percent of Ted Baker’s shareholders to get on board with the transaction. ABG has the flexibility to bump its cash offer should a rival step up with a richer proposal.

The Reebok parent plans to split Ted Baker’s intellectual property into an ABG-controlled holding company, while arranging for at least one operating company to deal with the brand’s physical retail, e-commerce and wholesale activities.

“ABG intends to explore options to transfer full or partial ownership and control of some or all of such operating companies to partners with established operating businesses,” Ted Baker said.

ABG, which believes Ted Baker has “significant growth opportunities” in North America, is entertaining “formal discussions to seek to combine Ted Baker Operations in North America with those of SPARC.” SPARC Group LLC is ABG’s joint venture with Simon Property Group that operates several brands in the U.S. under ABG’s IP umbrella.

Ted Baker interim chair Helena Feltham said the label “has grown into a unique British brand with a strong global presence” since men’s wear specialist Ray Kelvin founded the company in 1987 with a focus on “imagination, creativity, innovation and a rigorous focus on product design and quality.”

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The board believes ABG has what it takes to support Ted Baker’s “long-term global potential,” Feltham added.

ABG CEO Jamie Salter said Ted Baker’s “strong fashion credibility resonates with consumers around the world.”

“We are excited to build on the brand’s global foundation through a business model focused on licensing, wholesale, retail, digital and strategic marketing partnerships,” he added. “Under ABG’s ownership, we believe that Ted Baker is poised for continued growth and success.”

The 110-pence ($1.33) a share price tag was far lower than the 160-pence ($1.93) a share offer ABG considered back in May. But the offer still represents an 18 percent premium above Monday’s closing price.

Ted Baker has 370 stores and concessions in the U.K., Europe, North America, Middle East, Africa, Asia and Australasia. The transaction is expected to close in the fourth quarter.