Ted Baker shares receive bid fillip

Ted Baker, which recently put itself up for sale, says it has received a flurry of unconditional offers from potential suitors.

The fashion menswear retailer announced in early April, following bid interest and after consulting with major investors, it was conducting “an orderly process” to find a suitable offer.

Management says that it has since received a number of “non-binding proposals” from suitors who will now gain access to the company’s books for due diligence purposes.

Shares in the company rose 3% on Wednesday and are trading at 147.2p.

Sycamore starts the bidding

Ted Baker previously rebuffed a number of offers from private equity outfit Sycamore before putting up the for sale sign. The US-based firm made two offers of 130p and 137.5p and it has since emerged that former chief executive Ray Kelvin, who was ousted last year after allegations of inappropriate behaviour, would have backed the bids.

Kelvin remains a shareholder and advisor to the company, which is now headed by CEO Rachel Osborne. The second offer from Sycamore valued the company at £253.8m.

However, Ted Baker’s management said both bids “significantly undervalued” the company and “failed to compensate shareholders for the significant upside that can be delivered by Ted Baker as a listed company.” They argue that the retailer is “a leading global brand with a strong future.”

The company is currently trading at a market capitalisation of £271.38m.

It’s thought that Authentic Brands, the company behind Reebok, is also one of the interested parties. The company has also invested in David Beckham’s brand. However, it failed last year in its bid to buy Top Shop with JD Sports. It’s also believed that Sycamore is still in the running.

Sarah Riding, a retail and supply chain partner at lawyers Gowling WLG, recently told the FT that the approach from Sycamore suggested possible buyers might see the opportunity to expand the Ted Baker brand abroad. The chain currently operates 400 stores, including those in Europe and North America.

Ted Baker shares have lost 32% of their value in the past year and 94% over the last five years.

A tough retail environment

Following a series of corporate blunders, Ted Baker was hit hard by the pandemic but is currently undergoing a turnaround programme, spearheaded by Osborne.

The retail environment is especially difficult at the moment due to rampant inflation pushing up input costs and reducing consumer’s disposable cash. Associated British Foods, which operates Primark – albeit a discount retailer – warned this week that it would have to increase prices due to inflationary pressures.

There’s never any guarantee that a definitive offer will emerge for Ted Baker, but for now the shares are best held onto.

Ted Baker reports full-year results and its first-quarter trading update on 26th May, so investors may hear more then, if not before.

Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
* Best trading platform as awarded at the ADVFN International Financial Awards 2021