Boohoo raid completes break-up of Green’s empire
Written by Hit Music Radio News on 28/01/2021
Boohoo Group is in advanced talks to acquire the remaining components of Sir Philip Green’s high street empire in a deal that will accelerate the transition of famous British retail names to becoming online-only brands.
Sky News has learnt that Boohoo is nearing exclusive negotiations to snap up the Burton, Dorothy Perkins and Wallis brands from the administrator to Arcadia Group.
A deal is not certain to be agreed, according to people close to the proposed transaction, but could be announced as soon as next week if sufficient progress is made in the talks.
Other parties remain interested in the three brands and could yet buy them if discussions with Boohoo fall apart, according to insiders.
Boohoo is said to have indicated to Deloitte that it will pay little more than £25m for the trio of prominent clothing brands, just days after agreeing to acquire Debenhams’ brand and website for £55m.
If the Boohoo deal with Arcadia’s administrator goes ahead, it would spell further bad news for Britain’s crisis-hit high streets.
As with its swoop on Debenhams, Boohoo would not seek to retain any of the stores trading under the Burton, Dorothy Perkins and Wallis names, or their employees.
That would sharply increase the redundancy toll from the collapse of Arcadia, which employed roughly 13,000 people immediately before its collapse into insolvency in November.
On Monday, Asos, another of the UK’s most successful online fashion retailers, confirmed that it was in exclusive talks to buy the jewel in Sir Philip’s former crown – TopShop and TopMan – along with Miss Selfridge.
Deloitte has already sold Evans, a womenswear brand, to Australia’s City Chic, leaving a number of properties and logistics sites as the only other assets still to be offloaded once the brand deals are concluded.
In total, the administrators are likely to recover around £400m from asset sales – a figure that does not include TopShop’s flagship store at London’s Oxford Circus, which is the subject of a separate sale process.
The demise of Sir Philip’s retail group has, in the space of two pandemic-affected months, encapsulated the profound structural shift in the industry’s power base towards internet-based fast fashion retailers.
Since the outbreak of the virus, Cath Kidston and Laura Ashley have been forced into insolvency.
Other chains, including New Look, have embarked on desperate bids to persuade landlords to agree sharply reduced rent deals.
Boohoo, which was founded in 2006, also bought the Oasis and Warehouse brands last year after their collapse into administration.
The company now has a market value of more than £4.2bn, making it roughly 50% larger – in market capitalisation terms – than Marks & Spencer.
Boohoo’s valuation has, nevertheless, been hit hard in the past year by prominent failings in its supply chain and the treatment of workers within it, prompting a pledge to overhaul elements of its governance and operations.
The brands it is now seeking to acquire from Arcadia’s administrator are among the most venerable on the high street.
Burton was founded in 1903 and at one point in the 1950s was the largest multiple tailor in the world.
Dorothy Perkins was born six years after Burton, and was originally named Ladies Hosiery and Underwear Limited.
Alongside Wallis and the other Arcadia brands, they fell under the control of Sir Philip in 2002 when he bought the entire group for £850m
Just three years later, Arcadia paid what remains one of the largest-ever dividends in UK corporate history – £1.2bn – to Arcadia’s registered owner, Lady Christina.
In 2012, Sir Philip sold a 25% stake in TopShop’s immediate holding company to Leonard Green & Partners, a private equity firm, valuing the fashion chain at £2bn.
The tycoon was later to buy it back for just $1.
The Daily Telegraph reported this week that documents sent to Arcadia creditors disclosed that the company had collapsed owing them more than £750m.
Boohoo and Deloitte declined to comment on Thursday evening.
© Sky News 2020