Ted Baker rejects two takeover proposals from PE firm Sycamore

Ted Baker said on Monday that it had rejected two unsolicited non-binding takeover proposals from private equity firm Sycamore.

The fashion retailer said Sycamore made a 130p a share cash proposal on 18 March and another at 137.5p a share on 22 March.

"The board of Ted Baker 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 by Ted Baker 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 by Sycamore."

The company added that there can be no certainty any firm offer will be made nor as to the terms on which any firm offer might be made. It urged shareholders to take no action.

At 0825 BST, the shares were down 6% at 119.20p.

Laura Hoy, equity analyst at Hargreaves Lansdown, said: "It’s unsurprising that management’s not keen to give up the reins after a few difficult years. We’re finally starting to see some greens shoots from the group’s turnaround efforts now that formal occasions are back on the social calendar.

"However there’s still a bumpy road ahead with inflation weighing on customers’ willingness to shell out for a new outfit. Ted’s prices are on the higher end of the spectrum, but not quite reaching into luxury, meaning its customers won’t be immune to the cost of living squeeze and could start to slide down the value chain.

"The best of Sycamore’s offers reflected a 9% premium on Ted’s Friday closing price, so it’s a nod of confidence from management that they think they can deliver something better.

"On Sycamore’s side, the deal makes sense given the group’s stable of investments include a variety of American fashion brands similar to Ted. But as there’s still a lot of work to be done and as Ted turned its nose up at a relatively steep premium, it’s unclear if another offer could be coming."

Broker Shore Capital said: "Ted shares are up circa 27% since the private equity firm confirmed to be in the process of making an offer on Friday 18th March, but we would agree with the board that both offers do not reflect the health of the Ted brand equity.

"The question is, at what premium would investors consider a potential bid, noting that shares are up 10% over the past year. Despite inflation set to squeeze discretionary spend, we see Ted Baker in a stronger position than other competitors, ready to capitalise on the 'return to normal' trends post-pandemic."