Next and US investor in talks to bid for Topshop owner Arcadia

LaToya Harding
·Contributor
·3-min read
General view of a Topshop store logo, owed by Arcadia group on Oxford street in London, Britain, November 30, 2020. REUTERS/Simon Dawson
As many as 13,000 jobs are at risk from Arcadia’s collapse, which affected brands such as Topshop, Miss Selfridge, Burton, Dorothy Perkins and Evans. Arcadia operates almost 500 stores across the UK. Photo: Reuters/Simon Dawson

Retail fashion giant Next (NXT.L) is in advanced talks with US investor Davidson Kempner Capital Management about a joint bid to win control of Sir Philip Green’s Arcadia Group.

The move comes ahead of a revised 21 December deadline set by administrator Deloitte after Arcadia collapsed into administration last month.

According to sources, Next and Davidson Kempner were “likely, but not certain” to bid for the high street empire, Sky news first reported, with the US-based firm providing the majority of the funding required to complete a takeover.

Davidson Kempner, which gave a £180m ($243m) emergency loan to Poundland two years ago, also bought Oak Furnitureland out of administration in June.

The sale process has also piqued the interest of other bidders, including Mike Ashley’s Frasers Group (FRAS.L), supermarket chain Marks and Spencer (MKS.L), online fashion house Boohoo Group (BOO.L) and Authentic Brands, the owner of Forever 21 and US department store Barneys.

Insiders told Sky News there was still no certainty that Next will table an offer, highlighting that the company, headed by Lord Wolfson, had been holding discussions with other financing partners, including private equity firm Carlyle and turnaround specialists Alteri Investors.

As many as 13,000 jobs are at risk from Arcadia’s collapse, which affected brands such as Topshop, Miss Selfridge, Burton, Dorothy Perkins and Evans. Arcadia operates almost 500 stores across the UK.

Prior to its collapse, Arcadia declined a £50m lifeline from Frasers Group which was offered in November. It called the move a “publicity stunt”, heightening the rivalry between retail tycoons Philip Green and Mike Ashley.

The collapse of Arcadia also left struggling department store retailer Debenhams in limbo as Arcadia was Debenhams’ biggest concession holder.

Frasers confirmed in a statement earlier this month that it was in talks with Debenhams’ administrators about a possible rescue bid for the department store’s UK operations.

READ MORE: Sports Direct billionaire Mike Ashley eyes bid for bust TopShop-owner's brands

The group, which owns House of Frasers and Sports Direct, previously owned around 30% of Debenhams before it collapsed into administration in April. It spent £150m building a stake in the struggling department store.

The COVID-19 outbreak has seen many companies buckle under pressure, especially as many high street brands were already struggling pre-pandemic due to declining footfall, increased online competition and rising business rates.

Arcadia-owner Sir Philip Green built the company into a retail Goliath through a series of acquisitions in the early 2000s. At its height, the company’s brands were a stalwart of high streets across the country and TopShop — Arcadia’s crown jewel — was fronted by model Kate Moss.

Arcadia’s success helped Green amass a fortune of almost £5bn at his height.

However, in recent years, Green was embroiled in the scandal surrounding the collapse of BHS, which he sold for £1 in 2015.

MPs voted through a non-binding motion calling for his knighthood to be stripped and Green ultimately agreed to pay £363m to address a shortfall in BHS’ pension scheme.

Next declined to comment to Yahoo Finance on Saturday. Davidson Kempner has been contacted for comment.

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