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New York-based private equity group Sycamore Partners is considering an offer for UK clothing group Ted Baker, prompting shares in the fashion chain to soar.
Sycamore, which specialises in investing in retail and consumer businesses, said in a statement on Friday that it was “in the early stages of considering making a possible cash offer for Ted Baker”, although it added that “there can be no certainty that an offer will ultimately be made”.
Sycamore has until April 15 to decide whether to bid.
Ted Baker’s shares added a fifth to their value in early London trading on Friday, swinging their gains for the year into positive territory.
Sycamore has about $10bn of capital invested in companies, including US office supplies group Staples.
Ted Baker has a market capitalisation of about £180mn. It struggled during the pandemic and lockdowns because more than a third of its stores were located in large cities and shopping centres. Losses ballooned and forced the retailer to respond with heavy discounts. Sales “snapped back” last year, surging 50 per cent in the fiscal second quarter.
The group appointed Rachel Osborne as chief executive in 2020 and launched a turnround plan after a number of profit warnings. It has since focused on refreshing its brand, which was known for its formalwear, and worked at boosting its online presence. A pandemic shift in clothing tastes has prompted it to offer more casual options.
The company recorded sales of £199.3mn in the 28 weeks to August, chalking up a pre-tax loss of £25.3mn.
Ted Baker was founded in 1988 by Ray Kelvin who drove the company to achieve £640mn of annual sales at its peak with a valuation of £1.4bn. But Kelvin was forced to resign in 2019 following allegations of inappropriate behaviour.
Kelvin returned to the company in September 2020.
Numis Securities is acting as Sycamore’s financial adviser on the potential deal.
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