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Ted Baker shares slump after chosen bidder walks away

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The sale of Ted Baker looks to be in doubt (Nicholas T Ansell/PA) (PA Wire)
The sale of Ted Baker looks to be in doubt (Nicholas T Ansell/PA) (PA Wire)

Ted Baker has seen its shares plunge by more than a fifth after the frontrunner to take over the fashion chain pulled out of the running in the latest blow to its sale plans.

Ted Baker said its preferred bidder told the group on Monday evening that it would not be going ahead with an offer.

The retailer insisted this was not linked to the bidder’s review of its books under so-called due diligence.

It said it will now consider pressing ahead with other offers it has recently received as it seeks to get the sale process back on track.

But its shares slumped by as much as 23% at one stage as the sale looked to be in doubt, coming just two weeks after private equity suitor Sycamore also bowed out.

With record low UK consumer confidence, the cost-of-living crisis, the possibility of a recession and shaky equity markets, it is understandable that Ted Baker is desperate for a buyer

Victoria Scholar, interactive investors

Victoria Scholar, head of investment at interactive investors, said: “Ted Baker already had a difficult time with another potential acquirer after US private equity firm Sycamore Partners issued three takeover proposals but eventually walked away, leading to a plunge in its share price.

“With record low UK consumer confidence, the cost-of-living crisis, the possibility of a recession and shaky equity markets, it is understandable that Ted Baker is desperate for a buyer and explains why investors are shunning the stock this morning.”

Ted Baker, which has nearly 400 locations, launched a formal sale process in April after Sycamore had made a series of approaches for the brand and following interest from a number of other interested buyers.

The third approach by Sycamore valued the retailer at around £254 million.

It represents a significant fall from the company’s peak, when it was valued at round £1.5 billion.

Ted Baker was among luxury retailers hammered by the pandemic, but it had also gone into Covid in a weak spot following years of decline and is in the middle of a plan to revamp the business.

Most notably, founder and chief executive Ray Kelvin stepped away from his position after accusations of inappropriate behaviour.

Mr Kelvin, who denies the allegations, is still a shareholder in the business, which he set up in Glasgow in 1988.

The retailer recently revealed that it remained in the red in 2021-22, but cut its losses thanks to the return of parties and office work boosting sales.

It reported a pre-tax loss of £44.1 million for the year to January 29, compared with a £107.7 million loss in the previous year.

It said this was driven by 20.5% increase in revenues to £428.2 million as it benefited from the easing of pandemic restrictions in some countries and a jump in online sales.

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