Sycamore Partners, the US-based private equity group, has submitted a £ 250 million offer for London-listed fashion chain Ted Baker.
Sky News has learned that a proposal to price Ted Baker at 130p-a-share has been submitted in writing in the past few days.
This weekend it was unclear whether it had been formally rejected, although City sources indicated it was extremely unlikely to be approved by the dealer’s board.
If rejected, Sycamore will face the dilemma of either raising its offer before the mid-April deadline set by the UK Takeover Panel or leaving.
After Sky News revealed this month that Sycamore was considering making an offer for Ted Baker, the acquisition firm confirmed its interest in a statement to the London Stock Exchange.
She hired Numis, the investment bank, to advise her on her interests.
At the time, Ted Baker said he had yet to receive a formal approach.
“Ted Baker continues to make good progress with his transformation and the company is emerging from COVID as a stronger and more financially sustainable company,” the company said.
“The board is confident in the Company’s independent prospects and would evaluate any offer for the Company against the strong shareholder value creation it believes can be provided as a standalone company.”
Ted Baker’s shareholders are unlikely to be receptive to a 130p per share valuation approach, as the company’s valuation has plummeted from a peak of £ 1.4bn in recent years.
As of Friday’s close, its market capitalization was just £ 233 million, with the shares priced at 126.2p.
Despite its modest market capitalization, Ted Baker holds a prominent place in UK fashion retail.
It operates from hundreds of independent stores and franchises around the world and employs thousands of people.
The company was left without a permanent president following the death of John Barton, the City’s respected figure, late last year.
Ted Baker has experienced a torrid time in recent years, most notably in 2019, when founder Ray Kelvin walked away amid claims of inappropriate behavior towards female colleagues.
Since then, it has been plagued by profit warnings, accounting mishaps, and has been forced to deal with the COVID-19 pandemic from a position of relative financial weakness.
In 2020, it eliminated hundreds of jobs and raised £ 100 million to support its budget.
Like other fashion retailers, it is now struggling with the challenges posed by rising inflation, rising energy costs and falling consumer confidence.
However, activity has begun to show signs of recovery, with a recent trade update revealing that sales increased by 35% during the 12 weeks through January 29 over the same period a year earlier.
Mr. Kelvin remains a significant shareholder in the company and is likely to play a role in determining whether he remains independent.
Sycamore specializes in investments in the retail sector, having owned brands such as luxury footwear brand Kurt Geiger and is now reported to be exploring a $ 9 billion takeover bid for Kohl’s, the chain of large US warehouses.
His involvement in a £ 6 billion auction of Boots, the high-end chemist, elicited a skeptical response from insiders.
Sycamore and Ted Baker both declined to comment.