Ted Baker has agreed to a cut-price £211m takeover by the US group that owns Reebok and a stake in David Beckham’s clothing and merchandise empire.
The board of the retailer, which has more than 500 stores and concessions worldwide, has recommended that shareholders approve the purchase by Authentic Brands Group (ABG).
The 110p per share deal for the London-listed fashion brand, which has a market value of £167m, is well below the 160p per share ABG was eyeing in May as multiple Potential interested parties considered offers.
However, the value of the deal is 18% higher than the closing price of Ted Baker shares, which are down 35% over the past year, on Monday.
“The directors of Ted Baker believe that the terms of the acquisition are fair and reasonable,” the company said in a statement on Tuesday. “Accordingly, the directors unanimously intend to recommend that Ted Baker shareholders vote in favour.”
ABG has already obtained irrevocable commitments supporting the agreement from shareholders representing 50.7% of the issued share capital of Ted Baker, including the interests of its directors.
The retailer began a formal sales process in April after rejecting a series of offers from US private equity group Sycamore Partners and others.
According to a stock exchange announcement by Ted Baker in early June, “a preferred counterparty,” which had been invited to perform confirmation due diligence, had said it no longer intended to proceed with an offer.
ABG, which is valued at $13bn (£10.8bn) after selling several holdings to US private equity in recent years, has snapped up assets including Sports Illustrated magazine, Juicy Couture and brands associated with Muhammad Ali and Shaquille O’Neal, the Legends of boxing and basketball.
The company said on Tuesday: “ABG intends to use its global network of established operating partners with deep industry experience, along with its business model that combines leading brand management capabilities, to enhance the revenue and profitability of Ted Baker across all merchandise categories and geographic regions as it progresses. has for other acquired brands, including Reebok, Brooks Brothers, Nautica and Eddie Bauer.
“ABG believes that Ted Baker is better suited to private ownership as this will facilitate a restructuring of the business to maximize its future potential.”
In May, Ted Baker reported a £38.4m pre-tax loss in the year to January 30, up from £59.2m a year earlier.
Shares of Ted Baker collapsed in 2018 amid difficult business conditions for clothing brands and a scandal over a “forced hug” culture under its founder, Ray Kelvin, which led to his departure from the company.
The company was then hit by an accounting error and a series of earnings warnings.
Ted Baker is attempting a turnaround under its new boss, Rachel Osborne, who took over in 2020 after its core market for suits and social attire took a hit during the Covid-19 pandemic.