Shares in London-listed fashion retailer Ted Baker have tumbled this morning after the apparel brand confirmed that it had turned down no less than two proposals from U.S. private equity firm Sycamore Partners Management.
In response to weekend reports, the company confirmed today that it had rejected an initial offer of $1.71 from Sycamore and another of $1.81 per share made over the past two weeks.
The improved offer valued Ted Baker at $334 million but, after what the company’s management described as a careful review of the offers, the group determined that the bids significantly undervalued the business and “failed to compensate shareholders for the significant upside that can be delivered by Ted Baker as a listed company.”
Sycamore Partners made its offers in writing over the past few days but even before the formal rejection, analysts had indicated that it was extremely unlikely to be endorsed by the retailer's board.
Sycamore Weighs Fresh Ted Baker Bid
Sycamore now faces a decision as to whether it should come back with a higher bid before the mid-April deadline set by the U.K.'s Takeover Panel or walk away, having previously outlined its interest in a statement to the London Stock Exchange.
Ted Baker said in a statement: "Ted Baker continues to make good progress with its transformation and the company is emerging from Covid as a stronger and more financially sustainable business. The board is confident in the company's independent prospects and would evaluate any offer for the company against the strong shareholder value creation that it believes can be delivered as a standalone company."
Ted Baker is a U.K. fashion stalwart and trades from hundreds of standalone stores and concessions globally. However, the company has been without a permanent chairman since the death of John Barton, and has endured torrid times, with high profile management resignations and founder Ray Kelvin left under a cloud in 2019 amid claims of inappropriate behavior toward female colleagues.
Since then, it has faced profit warnings, accounting issues and the Covid-19 pandemic hit at a time when it was in a position of relative financial weakness - in 2020 it axed hundreds of jobs and raised $131 million to bolster its balance sheet.
As a result, the company's valuation has slumped from a peak of $1.85 billion in recent years and the shares priced enjoyed a spike after the bid rumors, hitting $1.71 per share before falling back to $1.57 after the rebuttal in late morning Monday trading.
Ted Baker Sales Recovery
More recently, the business has begun to show encouraging signs of a recovery, with a recent trading update revealing that sales rose by 35% during the 12 weeks to January 29 compared with the same period a year earlier.
Earlier this month, Ted Baker partnered with BigCommerce to unveil a new ecommerce site, which will allow the apparel retailer to manage its global online presence from a single store and offer “modern and frictionless” customer experiences.
As part of the revamp all of Ted Baker’s 12 regional storefronts will be localized, with shoppers able to browse in their preferred language and make purchases using their preferred currency.
“Central to Ted Baker’s future looking growth strategy is adopting a digital first approach that supports our endeavour to offer a premier shopping experience for our customers and build brand awareness beyond Europe,” said Ted Baker CIO Leon Shepherd.
Founder Ray Kelvin remains a significant shareholder in the company and despite not playing an active role in the business any longer he is likely influential in determining its final decision.
Sycamore specializes in retail sector investments including brands such as upscale footwear label Kurt Geiger. It is now being linked with a possible $9 billion takeover bid for U.S. department store chain Kohl's, which is also reportedly being pursued by Hudson’s Bay.
However, Sycamore’s possible involvement in an $8.8 billion auction of health, beauty and pharmacy retailer Boots has been met with some scepticism by analysts.
