Dive Brief:
- Authentic Brands Group has reached an agreement on the recommended acquisition of U.K. fashion company Ted Baker for around 211 million pounds ($255 million) in cash, according to a cooperation agreement from the companies.
- ABG intends to separate Ted Baker into an intellectual property holding company that would remain controlled by ABG, and one or more operating companies which would manage the brand’s physical retail, e-commerce and wholesale operations.
- “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,” the company said in the agreement.
Dive Insight:
Authentic Brands Group, which owns some of the most recognizable labels in retail including Brooks Brothers, Reebok, Eddie Bauer and Forever 21, is ready to add another apparel company to its roster.
The conglomerate believes there are “significant growth opportunities” for the brand in North America due to strong consumer recognition. ABG currently owns 50% of Sparc Group, a joint venture with Simon Property Group. Sparc operates over 1,600 stores in North America, along with e-commerce and wholesale operations. ABG is exploring the potential to combine Ted Baker operations with Sparc, according to the agreement. Sparc already runs operations for a number of the holding company's brands.
“Ted Baker is a highly regarded, uniquely British brand whose strong fashion credibility resonates with consumers around the world,” Jamie Salter, CEO of ABG, said in a statement. “We are excited to build on the brand’s global foundation through a business model focused on licensing, wholesale, retail, digital and strategic marketing partnerships.”
Ted Baker’s board is unanimously recommending that shareholders vote for the deal.
“This will give Ted Baker the stability it needs to turn its fortunes around as it has fallen out of favour among shoppers and faces more difficulties as consumers cut back on spend on clothing & footwear amid the cost of living crisis,” Emily Salter, senior apparel analyst at GlobalData, said in emailed comments.
The brand was suffering even before the pandemic and hasn’t adapted to the trend of casualization, according to GlobalData's Salter. “This is vital for Authentic Brands Group to tackle to ensure that it regains relevance among shoppers,” Salter said.
Talk of a sale of Ted Baker circulated this spring, with private equity firm Sycamore Partners emerging as a potential buyer. By the end of May, however, Sycamore had dropped out of the running.
The past few years have been rocky for the apparel company. In 2019, Ted Baker CEO Ray Kelvin resigned his position amid allegations of misconduct. The following year the company had an accounting scandal after it reported that the value of stock on its balance sheet was overstated by 58 million pounds — more than double its preliminary estimates.
Ray Kelvin had the idea for Ted Baker in 1987 while fishing. By the next year, the first store was open in Glasgow and became known for its men’s shirting. A decade later Ted Baker became a public company on the London Stock Exchange. Ted Baker currently has a portfolio of stores and concessions in the U.K., Europe, North America, Middle East, Asia, Africa and Australia. The brand has a range of collections including menswear, womenswear, accessories, fragrance and watches.
