Business

Beckham-backer ABG in talks to seal £300m Ted Baker takeover

The consumer goods giant which owns a controlling stake in David Beckham’s portfolio of branded products is racing to finalise a £300m takeover of Ted Baker, the London-listed fashion retailer.

Sky News has learnt that Authentic Brands Group (ABG), is the preferred bidder for Ted Baker and has indicated that it is willing to pay more than 150p-a-share for the company.

One retail executive said this weekend that ABG, which also owns Reebok, was being advised by Bank of America on the talks.

Although it is not in formal exclusivity, the executive added that a formal deal could be signed within weeks.

In a stock exchange announcement on Monday, Ted Baker said its board had “selected a preferred counterparty to take forward into a process of confirmatory due diligence”, but declined to name the bidder.

ABG’s interest in Ted Baker was revealed by Sky News last month, and would add the British brand to a stable of fashion names which includes Sports Illustrated magazine, brands associated with Muhammad Ali and Shaquille O’Neal, the basketball legend, and fashion labels such as Juicy Couture.

The privately held American company is run by the billionaire businessman Jamie Salter.

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It was recently valued at nearly $13bn (£10.3bn) after selling “significant equity stakes” to CVC Capital Partners, the Six Nations Rugby shareholder, and HPS Investment Partners.

ABG’s valuation has soared in recent years, after reportedly selling a controlling stake in August 2019 to a division of BlackRock, the world’s biggest asset manager, for $870m.

Its other shareholders include the buyout firms General Atlantic and Lion Capital, and GIC, the Singaporean state investment fund.

Other than Mr Beckham‘s branded goods division, Ted Baker would represent ABG’s most prominent British takeover to date.

David Beckham
Image:
ABG owns a controlling stake in David Beckham’s portfolio of branded products

Last year, it teamed up with JD Sports Fashion to buy TopShop from the ruins of Sir Philip Green’s fashion group, Arcadia Group, but was outbid by ASOS.

Ted Baker was put in play by a string of bid approaches from Sycamore Partners, an American private equity firm which bowed out of the formal sale process this week.

Sycamore had lodged three takeover proposals, the first two of which valued Ted Baker at 130p-a-share and 137.5p-a-share.

Ted Baker is steadily recovering from a tumultuous period which saw its shares collapse by over 90%.

This week, it said its annual losses had shrunk as customer demand rebounded after the pandemic.

Nevertheless, uncertainty over the outlook for consumer spending has darkened sentiment towards retail stocks in recent weeks.

The sector is also wrestling with the challenges posed by soaring inflation and higher energy costs.

Despite its modest market capitalisation, Ted Baker occupies a prominent place in UK fashion retailing.

It trades from hundreds of standalone shops and concessions globally, and employs thousands of people.

Ted Baker’s torrid period began in 2019 when founder Ray Kelvin left amid claims of inappropriate behaviour towards female colleagues.

Since then it has been hit by profit warnings, accounting mishaps and was forced to address the COVID-19 pandemic from a position of financial weakness.

In 2020, it axed hundreds of jobs and raised £100m to shore up its balance sheet.

Mr Kelvin remains a significant shareholder in the business.

Evercore and Blackdown Partners are advising Ted Baker.

Shares in Ted Baker closed on Friday at 135.8p, valuing the company at £251m.

Ted Baker and ABG declined to comment.

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