UK's Ted Baker rebuffs U.S. private equity firm's takeover proposals

(Reuters) -Britain’s Ted Baker said on Monday it had rejected two unsolicited takeover proposals from private-equity firm Sycamore Partners Management as they significantly undervalued the fashion retailer.

FILE PHOTO: People shelter under umbrellas as they pass a Ted Baker a store in London, Britain October 06, 2015. REUTERS/Neil Hall

The company said the back-to-back proposals from New York-based Sycamore failed to “compensate shareholders for the significant upside that can be delivered by Ted Baker as a listed company”.

Takeover interest in British companies is at its highest in years as the pandemic and uncertainties linked to Britain’s exit from the European Union have led to a steep drop in valuations.

Sycamore had raised its proposal for Ted Baker to 137.5 pence per share on March 22, valuing the retailer at 253.8 million pounds ($333.65 million), after its initial proposal of 130 pence per share was turned down by the British group.

The revised proposal represents a premium of nearly 40% over Ted Baker’s closing price on March 17, when the Sycamore approach was first reported.

Sycamore, which has until April 15 to make a firm offer for the London-listed company, did not respond to a Reuters request for comment.

Ted Baker’s shares were down 3.3% at 122 pence as of 0930 GMT after the upmarket retailer disclosed the proposals.

“It’s unsurprising that management’s not keen to give up the reins after a few difficult years,” said Laura Hoy, equity analyst at Hargreaves Lansdown.

“We’re finally starting to see some green shoots from the group’s turnaround efforts now that formal occasions are back on the social calendar.”

Ted Baker is in the middle of a three-year turnaround plan under boss Rachel Osborne as it aims to boost savings and strengthen its online presence.

The group had faced setbacks, including profit warnings, management changes and an accounting scandal, since founder Ray Kelvin stepped down in 2019 amid misconduct allegations, which he denies.

The coronavirus crisis compounded difficulties, as lockdowns and restrictions hammered retail operations and forced the company to cut hundreds of jobs.

The group’s shares, which traded as high as 30 pounds in 2015, have since crashed to trade at 1.26 pounds as of Friday’s close.

($1 = 0.7607 pounds)

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