Authentic Brands, the owner of Juicy Couture, has struck a deal to buy Ted Baker for about £211m (€250m) in a cut-price cash deal which could secure the future of the struggling fashion chain.
The US group offered 110 pence a share for the chain in a deal that represents a premium of about 18% to the retailer’s closing price earlier this week, and the shares on Tuesday surged by around the same amount.
Ted Baker’s directors are unanimously recommending the deal.
New York-based Authentic Brands previously held discussions with Ted Baker and indicated it was willing to pay a higher price but then walked away.
Private equity fund Sycamore Partners also bowed out of the sale process after offering as much as 137.5 pence a share.
Founded by Jamie Salter, Authentic Brands has become a key consolidator in the retail industry and is the owner of licensing and marketing rights to names like David Beckham and Juicy Couture. It agreed to buy Reebok from Adidas in August of last year for $2.5bn (€2.46bn).
Authentic Brands said Ted Baker is “a distinctive British lifestyle brand” and one option it’s exploring is to merge the UK retailer’s operations in North America with Sparc, its joint venture with Simon Property Group which operates about 1,660 stores.
The lower price agreed comes amid tough market conditions for British retailers and as Ted Baker’s turnaround struggles to regain momentum.
The chain was engulfed in a scandal in 2019 when founder Ray Kelvin departed after being accused of inappropriate hugs and other behaviour in the workplace; Mr Kelvin denied any wrongdoing.
Led by chief executive Rachel Osborne, Ted Baker shares have lost more than 90% of their value in the past four years.
“As hard as leaving Ted has been, to this day I feel the same passion for design and product to do it all again,” Mr Kelvin said in a statement.
“I am unsure if Ted Baker is still the company I once knew, however I hope under new ownership it will regain its identity,” he said.
Mr Kelvin still owns more than 10% of the company. The two largest shareholders are Toscafund Asset Management, founded by veteran city investor Martin Hughes, and Schroders. Toscafund first invested in Ted Baker about three years ago.
Ted Baker has grown to 377 stores and concessions worldwide, including a handful in Ireland north and south, since Mr Kelvin started the business as a men’s shirt shop in Glasgow in 1988.