The battling offers for Sir Philip Green’s Topshop’s parent empire, Arcadia Group, are believed to include a consortium that includes Next Plc in the lead.
Arcadia Group collapsed into administration in November, the U.K. equivalent of a bankruptcy in the U.S., and administrators had set this Jan. 18 as the deadline for bids. There’s been much interest in both the individual brands and in Arcadia Group.
Currently, a consortium led by Next and U.S. hedge fund Davidson Kempner is believed to be in the lead, according to a report in The Sunday Times. Also in the race is Mike Ashley’s Frasers Group. American brand management firm Authentic Brands Group is also on the hunt, and is said to have made an offer working with British firm JD Sports. The ABG venture is also believed to be working with Ashley on a combined bid, possibly with each taking different stakes in Arcadia’s brands. British fashion e-tailer Boohoo Group plc has also kicked the tires, but isn’t considered a leading contender against the other two competing bids.
The administrators have already sold Arcadia’s plus-size fashion business Evans to City Chic. While Topshop and Topman are thought to be the premier brands, Arcadia also owns Burton and Dorothy Perkins. And while he’s expressed interest in all of Arcadia, Ashley is said to be keenly interested in Dorothy Perkins. Ashley has been trying to cut a deal for bankrupt Debenhams, as Dorothy Perkins is the department store’s largest concession.
Last year, Next acquired the U.K. operation of Victoria’s Secret as part of an L Brands Inc. joint venture, which has been operating VS stores in the U.K. and Ireland, and the online operation, currently operated by VS parent L Brands, will be folded into the JV this spring. Next owns a 51 percent majority interest in the JV.
In the case of Arcadia, Next is expected to take a minority interest if its offer with the American hedge fund is successful. Davidson Kempner had also been in talks with Day, who was trying to rescue his Edinburgh Woollen Mill Group before its brands collapsed into administration in November. The intellectual property assets for fashion brand Jaeger have been acquired by Marks & Spencer, while the Edinburgh Woollen Mill brand and stores, along with the Ponden Home and Bonmarche retail chains, have been acquired by an international investor group. Peacocks, the value-oriented department store retailer, is still in administration. Davidson Kempner was in talks with Day to save the value chain. It wasn’t immediately clear if those talks were still ongoing or if the hedge fund had decided to shift its attention to Arcadia Group.