The troubled U.K. men’s and women’s wear chain put itself up for sale last week after at least two potential bidders expressed interest in the British high street retailer. One of those bidders was Sycamore Partners Management, the U.K. arm of U.S.-based private equity firm Sycamore Partners. The offers received were unsolicited, nonbinding proposals.
Before Ted Baker put itself up for sale, Sycamore had until April 15 to definitively state whether it would bid or walk away, according to regulatory rules. On Wednesday, Ted Baker confirmed that Sycamore will participate in the formal sale process. That move buys the American private equity firm a bit more time to evaluate what it wants to do, as it is now no longer bound by the April 15 deadline.
Participating in the formal sale process also gives Sycamore access to data that might not otherwise be available. That information helps a company evaluate how the business is doing, and is part of the normal due diligence in any merger or acquisition. The caveat is there’s no guarantee that Sycamore will put in an offer.
Ted Baker said it has hired Evercore and Blackdown Partners as financial advisors, according to regulatory filings.
Separately, Sycamore in the U.S. is also keeping close tabs on the sale process of Kohl’s Corp. and has expressed its interest in the department store retailer.
Sycamore initially submitted two nonbinding offers for Ted Baker, with the last one believed to be in the range of 250 million pounds to 255 million pounds ($327.8 million to $334.3 million). Ted Baker had rejected the higher offer, and Sycamore submitted a third one that was incrementally higher.
Ted Baker has said that the nonbinding offers received so far have been rejected because they “significantly undervalued” the company. No one knows what the high street retailer is seeking in terms of price range. However, the rejected Sycamore offer and its incrementally higher follow-up bid sets a floor for all new ones in terms of a starting point for further discussions.
The U.K. high street retailer reported a 107.7 million pound pre-tax loss ($151.9 million) in 2020, the result of plummeting demand for dressier fare during the Covid-19 pandemic.
The retailer also said it could change or end the sale process at any time. But given that the mergers and acquisitions cycle remains busy, there could be other potential bidders sitting on the sidelines that may elect to jump in.
Investment bankers entered 2022 following a strong year of deal activity in 2021. According to a KPMG report, sectors such as technology, media and telecom had a banner year, with overall deal volume jumping 48 percent to 8,354 transactions from 5,630 in 2020. In general, some of the activity was from a boom in SPAC deals.
The most recently announced SPAC in the fashion industry involves the Lanvin Group. Formerly Fosun Fashion Group, the luxury fashion firm agreed to join forces with Primavera Capital Acquisition Corp in a deal that values Lanvin at $1.5 billion.
Another was e-commerce software provider Nogin going public via a SPAC, after its merger with Software Acquisition Group Inc. III. The deal gives the platform provider to Modcloth and Justice an enterprise value of $646 million, while raising up to $191 million to fund its growth.
As for fashion and apparel, the stage remains active, Mark Vidergauz, CEO of The Sage Group LLC, told Sourcing Journal recently. The boutique investment banking firm helped Frankies Bikinis sell a minority stake to Victoria’s Secret & Co., and it worked with home textile products brand Chilewich sell a majority stake to a private equity vehicle of W.R. Berkley Corp. Both deals were announced last month.
In fact, in anticipation of a robust M&A market, Sage in February said it formed a global investment banking partnership with Spayne Lindsay & Co. that’s focused on the consumer sector. The two have worked together before on a number of cross-border transactions, according to Vidergaux. Sage is based in Los Angeles, while Spayne Lindsay’s home base is in London.