Oasis, Coast sale axed: was it worries over bidder or was price too low?

First it was Shop Direct calling off its mega-billions sale and now Kaupthing is believed to have ended the bidding process for its trio of key (but far less valuable) UK fashion brands, Oasis, Coast and Warehouse.

Oasis is one of a trio of chains whose future is uncertain

Press reports at the weekend said the Icelandic bank has called a halt to the sale of the chains, but whether it was over the slightly problematic issue of the sole bidder being on an Interpol wanted list is unclear.

As Fashion Network reported last month, the only bidder left for the chains was Emerisque, a company controlled by entrepreneur Ajay Khaitan. 

He’s on a wanted list linked to an alleged fraud in India nearly 30 years ago. But his spokesman had earlier said he denied any personal involvement in the fraud and that the amount involved was only £7,000, a sum paid back with interest some years ago. He emigrated to the UK 20 years ago and a UK court had said there was no case to answer back in 2015.

But was the low price the chains might fetch an even bigger issue for Kaupthing? The troubled bank, which was taken over by the Icelandic government during the financial crisis, ended up owning the fashion brands after the collapse of Baugur due to that same crisis.

It had originally been said to be seeking around £100 million for its fashion assets. But recent reports said that Emerisque was offering just £60 million.

Whether it was this £40 million shortfall or the fraud allegation is the big question.

The Sunday Times reported the cancellation of the sale process at the weekend and also said that Kaupthing hadn’t confirmed the specific reason. But CEO Paul Copley suggested that there is more value in the chains than a £60 million price would suggest. “We feel the market does not currently recognise the value we see in the business,” he told the newspaper.

This would indicate that perhaps Interpol’s interest in the potential new owner  would have been an issue, but not the overriding one. 

Other names previously thought to be interested included Edinburgh Woollen Mill’s Philip Day, that serial buyer of distressed brands down on their luck (such as Austin Reed and Jaeger),  as well as the ex-owner of Brantano and Jones Bootmaker, Alteri Investors. Other firms also enthusiastically buying British assets, Office shoes owner Truworths, and Foschini, which owns Whistles and Phase Eight, were once thought to have been considering a bid.

So with no change of ownership on the horizon, it will be interesting to see what CEO Copley will do. Under new ownership, Oasis, Coast and Warehouse could, perhaps, have been expected to close a raft of stores and try to build up their e-stores further. We’ll have to wait and see whether management will proceed in this way or whether another bidder could emerge.

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