Ted Baker seems to be taking a haircut on its sale price.
A source familiar with the talks said the British high street retailer is expected to announce this week—as early as Tuesday—that Reebok owner Authentic Brands Group has firmed up a $200 million-plus deal to buy the contempory fashion label.
A spokeswoman said ABG is “not able to comment at this time.”
Ted Baker has been entertaining a variety of suitors since April, after American private equity firm Sycamore Partners first expressed interest in buying the struggling men’s and women’s wear chain in March. That led to the retailer putting up the “for sale” sign. Sycamore submitted two nonbinding offers for the British retailer, but eventually walked away. However, the private equity firm did set a baseline offer valued at between 250 million pounds to 255 million pounds ($327.8 million to $334.3 million). Ted Baker is said to have rejected the higher offer, and Sycamore had submitted a third one that was incrementally higher.
Ted Baker has said that it rejected the nonbinding offers because they “significantly undervalued” the company and its turnaround efforts. ABG entered the fray in late April. The brand management firm has been eyeing acquisition prospects overseas, and previously considered bids for bankrupt Debenhams and Arcadia Group.
While Juicy Couture parent ABG became the preferred bidder to continue negotiations, sources said ABG walked away from talks in June. Neither ABG nor Ted Baker ever confirmed that ABG was the bidder that balked. Ted Baker said it would review “other non-binding proposals.”
The high street retailer reported a 107.7 million pound pre-tax loss ($151.9 million) in 2020. Global economic turmoil and rising inflation have given investors pause when it comes to acquiring companies, meaning deals only get done at the right price. That’s because buyers are doing extra due diligence given an anticipated consumer spending slowdown.
In the case of Ted Baker, it had to settle for a lower price tag. With a sale of just over $200 million, the British retailer is selling for considerably less than what Sycamore offered.
ABG isn’t the only buyer that’s had second thoughts. Sycamore walked away from a deal to acquire Victoria’s Secret after inking an agreement because the Covid pandemic eviscerated the mall business. And LVMH Moët Hennessy Louis Vuitton also tried to walk away from its deal to buy Tiffany, although many at the time thought it was angling for a better deal. LVMH eventually acquired the American luxury jewelry retailer, and managed to get a $400 million discount in the process.