New York-based Authentic Brands Group (ABG) Inc will purchase UK clothing retail chain Ted Baker Plc in a cash deal of about $254 million. Ted Baker had put itself up for sale earlier this year. Many companies, including ABG, had submitted non-binding proposals, it had said. After discussions with Ted Baker earlier this year, ABG indicated it was willing to pay a higher price, but then backtracked.
Ted Baker’s directors unanimously recommended this deal.
ABG believes it will be a good custodian of the Ted Baker brand and is well positioned to accelerate its growth and enhance its value.
It intends to use its global network of established operating partners with deep industry expertise, together with its business model that combines leading brand management capabilities, to enhance Ted Baker’s revenue and profitability across merchandise categories and geographic regions as it has for other acquired brands, including Reebok, Brooks Brothers, Nautica and Eddie Bauer.
ABG believes that Ted Baker is better suited to private ownership, as this will facilitate a restructuring of the business in order to maximise its future potential, a press release from Ted Baker said.
After completion of the acquisition, ABG wants to separate the Ted Baker business into two units: an intellectual property holding company that would remain controlled by ABG and one or more operating companies that would manage the physical retail, e-commerce and wholesale operations of the Ted Baker business.
ABG intends to explore options to transfer full or partial ownership and control of some or all of such operating companies to partners with established operating businesses.
ABG feels there are significant growth opportunities for the Ted Baker brand in North America given the latter’s consumer recognition in this market.
ABG owns 50 per cent of SPARC Group LLC, a North American retail, e-commerce and wholesale operating joint venture alongside Simon Property Group, a leading owner and operator of regional shopping malls and outlet centres in North America.
SPARC operates close to 1,660 stores in North America and has substantial e-commerce and wholesale activities. Whilst detailed intentions and plans have not yet been formulated, to accelerate growth and provide operating economies of scale, one of the options which ABG may explore is the potential to enter into formal discussions to seek to combine Ted Baker Operations in North America with those of SPARC.
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