ASOS reportedly turned down higher offer for Topshop from Shein
ASOS reportedly turned down a higher offer for Topshop and Topman from Chinese giant Shein, which was bidding for the former Arcadia brands on a joint ticket with US brand house Associated Brands Group (ABG).
It was reported over the weekend that Shein and ABG had bid £215.5 million for Topshop and Topman but ASOS instead sold a 75% stake for £135 million as part of a joint venture deal with Heartland A/S, owned by its largest investor Anders Holch Povlsen, the Danish billionaire and owner of the Bestseller brand.
The joint venture means that ASOS can continue to sell the Topshop and Topman brands via its online channels and ASOS is promising a full brand relaunch over the next six months. It also says it plans to strike new online and offline wholesale deals to expand the brands' presence.
While the initial sum raised from the JV is considerably less than the offer made by Shein and ABG, ASOS has argued that long term the deal is in the better interests of shareholders as it will continue to benefit from its future success. It is anticipated that Holch Povlsen might sell Topshop and Topman clothing through its Bestseller stores and may even open Topshop stores on the high street.
The Topshop joint venture was part of a wider financial restructuring at ASOS and one shareholder told The Times they were pleased with the deal: “They raised enough money to refinance and got to keep [access to] the brand. It’s a better deal than selling to Shein because it means Topshop will open stores."
Shares in ASOS have jumped on the back of the news of the deal from a closing prices of 367.6p on 4 September to this morning's trading of approximately 444p, suggesting the City liked the deal. Holch Povlsen currently owns around 28% of ASOS shares and is a long-time backer of the company. Its second largest shareholder is Frasers Group with almost 26%.
The JV was sealed following a competitive sale process for the brands, carried out by JP Morgan. The Times reports that the Shein deal was close to being agreed but ASOS backed out at the last moment.
ASOS purchased the Topshop and Topman brands – the former jewels in the crown of the collapsed Arcadia fashion empire that had been led by retail mogul Sir Philip Green – in 2021 for £265 million. That deal led to the closure of all of Topshop and Topman's retail stores, including its flagship on London's Oxford Street which is currently being transformed into a branch of IKEA. The disappearance of Topshop and Topman from the high street has been much lamented.
ABG has been highly acquisitive of late and was understood to have been interested in buying Topshop when it first came on to the market, with rumours at the time suggesting it was planning to team up with JD Sports to buy it. It went on to buy British fashion brand Ted Baker, but was hit by an ill-advised licensing deal with Dutch company AARC to run its UK and European stores. Due to financial difficulties at AARC, ABG said it was obliged to place Ted Baker's UK business into administration which led to the closure of all of its UK stores. It is reported that the fate of Ted Baker had been of the deciding factors in ASOS backing out of the deal.