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Next in advanced talks about launching bid for Arcadia brands

Lauretta Roberts
18 December 2020

Next, in partnership with US investor Davidson Kempner, is reported to be in "advanced talks" about launching a bid for Arcadia's brands.

According to Sky News, the high street giant and US investor are "likely but not certain" to table a joint bid for the brands, which include Topshop, Miss Selfridge, Dorothy Perkins, Burton, Wallis and Evans.

Arcadia's administrator Deloitte has extended the deadline for bids for Sir Philip Green's collapsed retail chain until Monday. It has previously been thought that Deloitte would like to secure a deal before Christmas.

If Next and Davidson Kemper were to bid, the investor is said to be likely to provide most of the investment and be the majority shareholder.

However no bid is certain and it is understood that Next has also been in discussions with other investment partners as well.

A number of big names are said to be in the frame to take a shot at all or some of the Arcadia brands including Boohoo, Marks & Spencer, Tesco (which is said to be interested in Dorothy Perkins given that it holds a number of its concessions), ASOS, Primark parent Associated British Foods and Mike Ashley's Frasers Group.

While the decision is not in his hands, it is believed that Sir Philip Green favours Boohoo as a destination for Arcadia's prize asset Topshop, but any bid from Boohoo would almost certainly lead to the closure of its stores.

Boohoo has made no secret of its desire to acquire more brands and its management team are heavily incentivised to grow the business aggressively. At the start of the COVID-19 crisis Boohoo acquired the brands and IP of Oasis and Warehouse, which had fallen into the  hands of liquidators from Hilco.

Last year it acquired their former stablemates Karen Millen and Coast and all have  been reinvented as online only brands.

However Topshop, in particular, is likely to attract a number of interested parties and Deloitte is said to have attached a price tag of £200m to that brand alone.

Next, which is one of the most solid performers on the high street, has been expanding its third-party brand business of late. Earlier this year it fashioned a deal to take control of the UK business of US lingerie group Victoria's Secret.

To execute that deal Next formed a JV with Victoria’s Secret parent L Brands. Next owns 51% of the JV and will operate Victoria's Secret's UK stores and, from Spring 2021, the UK online business.

Some 13,000 jobs are at stake at Arcadia, which called in administrators on 1 December having failed to secure emergency funding to keep the business afloat. A secured loan offer of £50m from Frasers Group was dismissed before the administrators were appointed.

Frasers has now made a formal confirmation of its interest in the potential of tabling a bid for some or all of the Arcadia Group. However the company is also in talks to save parts of the Debenhams business, which is in the process of being liquidated.

Debenhams operates 124 stores and had been heavily reliant on Arcadia, which operates multiple concessions across the Debenhams network. The department store had appointed administrators during the first national lockdown and was in advanced talks about a deal with JD Sports when Arcadia collapsed. Following the news from Arcadia, JD walked away from talks, allowing Frasers to step in.

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