TED Baker saw its shares jump more than 14 per cent as it launched a formal sale process after rejecting a series of indicative takeover offers.
The fashion retailer made the move after receiving a third “unsolicited” approach to sell.
It comes a week after Ted Baker rejected two indicative takeover offers by US private equity suitor Sycamore Partners, the latter of which valued the business at £254 million.
The first proposals were rejected after they “significantly undervalued” Ted Baker, the company board said.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said the volatile economy partly created by the UK’s departure from the European Union has helped prompt activity.
She said: “Takeover interest in British companies is at fever pitch, as valuations have come down following the challenging cocktail of the pandemic and Brexit.”
The retail firm did not disclose the value of the latest approach by Sycamore or the unnamed third party.
“In view of the interest expressed by potential offerors, and having consulted its major shareholders, the board has decided to conduct an orderly process to establish whether there is a bidder prepared to offer a value that the board considers attractive relative to the standalone prospects of Ted Baker as a listed company,” the firm said.
The company added that interested parties will be invited to submit non-binding offers to its financial advisers.
It said a select number of these will move to a second phase.
READ MORE: Ted Baker shares soar as takeover interest confirmed
The company also said: “Despite the impact of Omicron on the fourth quarter of the year to January 29, 2022, Ted Baker delivered group sales growth of 35% compared with last year, and trading margin improved strongly demonstrating the progress the company is making in re-establishing its premium brand positioning.
“Ted Baker has a strong balance sheet, with a net cash position at year end, and ample liquidity headroom to continue to grow.”
It said that it “intends to conduct a targeted process, focused on those parties who understand and value the full potential of this unique brand”.
Ted Baker said: “It is currently expected that a select number of parties will be invited to participate in a second phase.
“Those parties will be required ... to enter into a non-disclosure agreement and standstill arrangement with Ted Baker ... further announcements regarding timings for the formal sale process will be made when appropriate.”
Ted Baker added that it has not yet had discussions with Sycamore regarding whether the US investment firm will participate in the sale process.
The company's hares were trading as high as 2,500p just four years ago.
As was the case with most retail, the firm was hit hard by the pandemic, but it had also gone into Covid in a weak spot following years of decline.
Ms Lund-Yates said that it “isn’t wholly surprising” that there is interest in Ted Baker.
She said: “Ted Baker’s share price has taken a real beating recently, as wider macro challenges have been compounded by its declining sales. The structural decline in retail, coupled with Ted Baker’s exposure to occasionwear, which was one of the worst hit areas during lockdowns, have made for very challenging conditions.
“The price that Ted Baker will accept from a buyer is clearly more ambitious than what the existing bids offer. Ted Baker is keen to point out the potential growth for the brand, including around the benefits of a new leaner, more digital operation.
"There may well be a disconnect between Ted Baker’s valuation of itself and the amount a third party is willing to spend on a much improved, but nevertheless struggling, bricks and mortar retailer.”
Ted Baker shares closed 14.35%, or 18.4p, up at 146.6p.
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