Reebok parent company Authentic Brands in talks to purchase UK brand Ted Baker

Authentic Brands Group, parent company of popular brands including Reebok, Forever 21, and Juicy Couture, has agreed to purchase the U.K. clothing retailer Ted Baker.

The purchase price of $254 million (211 million pounds) reflects an approximately 18% premium over Monday's closing price for Ted Baker.

According to Ted Baker, the company's board will unanimously propose that shareholders approve the transaction.

 ABG said that it has plans to divide the Ted Baker business into a holding company for intellectual property which would continue to be under its control once the deal is completed.

Authentic Brands emphasized that while it aimed to keep Ted Baker's London headquarters, especially for its design teams, it might have to be adaptable and adjust their operational model due to the developing macroeconomic environment.

It was stated that doing so may mean combining Ted Baker's corporate offices or R&D operations with those of an operating partner. In a process that could result in shop closures, it also intends to evaluate the "retail footprint."

The bid represents "a fair value for shareholders and balances the company's growth prospects with the risks of the uncertain economic environment in which the business is operating," according to directors of the UK group.

They added that economic uncertainties included the possibility of a prolonged recession in the UK. 

Authentic Brands issued a notice that it was impossible to rule out store closings and employee layoffs at the company.

The majority of Ted Baker's shareholders, including the company's founder Ray Kelvin, value investor Toscafund, and fund managers Schroders and Oasis, who jointly control 50.7% of the company's stock, supported the offer, according to Financial Times.  A scheme of arrangement would be used to carry out the takeover, and it would need to receive support from three-quarter of the company's shareholders.

Ted Baker was forced go on the market earlier this year due to pandemic-related troubles, had been the subject of months' worth of speculations about its survival until Tuesday's statement put an end to it.

Before starting its own sale process, Ted Baker turned down a number of offers from private equity company Sycamore Partners. Before walking away, ABG had already discussed a deal with Ted Baker.

After the UK brand turned down a proposal from Sycamore for 137p per share in April, the official sale process kicked off.

ABG had been Ted Baker's favored bidder throughout that process, but it withdrew owing to the worsening of the wider economy.

Although Authentic Brands later made a revised bid that they determined to be the most appealing and achievable proposition for Ted Baker, the UK brand and its advisors continued talking to other bidders.

Amid the ongoing inflation which is causing consumers to cut down on their spending power, Ted Baker is still determined to profit from the sustained strength of luxury spending.

More mergers and acquisitions have taken place in the luxury retail sector as a result of the sector's growth, and the weakening pound has made British businesses more accessible to foreign investors.



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