Jan 23, 2021
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Asos now leading Topshop takeover race - report

Jan 23, 2021

Another day, another report about who’s leading the race to take over Topshop/Topman. This time it’s Asos that’s being touted as the frontrunner. That news comes a week after Next was said to be the likely winner and days after it then quit the race citing too high a price.

Miss Selfridge

Sky News said on Saturday that Asos moved into the lead after Next’s exit from the fray. But earlier reports had also cited China’s Shein as the top contender. Interestingly, it’s said to be also interested in Arcadia’s Miss Selfridge brand, another label that serves the young consumers who are its core target market.

Other bidders are said to include Boohoo Group, Frasers and an Authentic Brands/JD Sports consortium. 

The news will be worrying for those working in the stores and a major headache for retail landlords as Asos is a pureplay online retailer. The chances of it wanting to run any of the stores are slim.

On Saturday evening, Sky News quoted a source close to Asos saying no deal has been struck yet and there’s no certainty that it will be successful.

The situation has been described as “fluid” and that seems to be an understatement given the speed at which frontrunners can become also-rans and new names emerge.

What does seem to be impacting all of this is the potential purchase price. Arcadia’s brands had been estimated by Brand Finance to have a value of around £800 million a year ago, but only half that figure by the time the business went into administration. Estimates for Topshop were around £200 million late last year. 

Of the Arcadia empire, the Evans label has already been sold (to Australia’s City Chic) and a decision taken to close the Outfit chain. That leaves Topshop/Topman (Arcadia’s leading brands), plus Burton, Dorothy Perkins, Wallis and Miss Selfridge.

While Topshop was seen as the most in-demand of these brands, there had been speculation that the administrators might struggle to get bids for it above £200 million. But there’s now been talk of bids coming in at between £250 million and £300 million, with Next, for one, apparently thinking this was too much in such a difficult market environment.

But Next would have been looking at the brands’ value from a multichannel viewpoint rather than a pureplay one, which could partly explain the different values bidders are placing on them. The investment needed to make the brands profitable again via physical stores could be much heavier than to turn them into online-only money-spinners.

The administrator, Deloitte, has a duty to get the best possible price and that price isn’t likely to be paid by any bidder other than one that will close the hundreds of stores and shed thousands of jobs.

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