Ted Baker has had two offers from Sycamore, rejected both
Ted Baker confirmed on Monday that it has had not one, but two, offers from Sycamore Partners but that it has rejected both of them.
The UK fashion retailer is in the sights of the American private equity giant, which offered 130p for each Ted Baker share on March 18 and submitted a revised proposal of 137.5p for each share on March 22.
Earlier reports were only aware of the initial offer that valued the company at around £250 million. That figure was higher than the lows it reached last year when its shares were a little more than 80p each, but a long way away from the highs of £1.4 billion achieved several years ago.
News of the offers had been expected to elevate the Ted Baker share price from its Friday closing figure of around 126p. But the fact that the board has said it rejected both offers and seemed determined to continue on its current path actually sent the share price down in early trading.
The shares had risen earlier in March from a price of below 90p each to where they closed on Friday purely on optimism about a Sycamore bid. But news that the company doesn't seem prepared to sell itself – or least not at this price – meant the stock began to fall back towards its previous level. Had investors believed in a realistic prospect of Sycamore coming back with a higher bid and the board being prepared to accept it, the chances are that the price would have continued to rise (as happened last year when Morrisons became a bid target and was eventually bought).
The board said that it “carefully reviewed both of Sycamore's proposals with its advisers and concluded they significantly undervalued Ted Baker and failed to compensate shareholders for the significant upside that can be delivered as a listed company. Ted Baker is a leading global brand with a strong future. The management actions taken over the last two years have put the business on a firm footing and it is now well on the way to recovery following a turbulent period”. The board is focused on “delivering value” for Ted Baker's shareholders “well in excess of the price offered”.
Sycamore meanwhile, hasn't responded to the latest developments and it will be interesting to see what its next move is. It's clearly been hoping that it could pick up Ted Baker for a cheap price, but with the board set against it, that's not going to happen for now.
The question is whether – having already raised its original offer by an extra 7.5p – it will be prepared to make a significant move upwards on its last offer price, or whether the prospect of buying Ted Baker at a higher price makes it less appealing. The company has until mid April to find more money or to walk away. It's unclear whether its interest in the retailer might also flush out other possible bidders.
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