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(Alliance News) - Online clothing retailer boohoo said Monday it has bought the Debenhams brand, while online peer ASOS confirmed it is in talks to buy Arcadia's Topshop.
boohoo said it has acquired all of the intellectual property assets of department store chain Debenhams from its joint administrators for GBP55 million in cash.
The company will only be acquiring brands and associated intellectual property rights. The deal does not include Debenhams retail stores, stock, or any financial services.
"The transaction represents a fantastic opportunity to grow the group's target addressable market and increase the share of wallet opportunity through a new capital light and low risk operating model that is complementary to the group's highly successful direct-to-consumer multi-brand platform," said boohoo.
The AIM-listed firm said it intends to "rebuild and relaunch" the Debenhams platform. It expects to relaunch Debenhams on the group's platform in the first quarter of the 2022 financial year, which for boohoo begins in February.
boohoo Executive Chair Mahmud Kamani described the deal as "transformational".
"Our ambition is to create the UK's largest marketplace. Our acquisition of the Debenhams brand is strategically significant as it represents a huge step which accelerates our ambition to be a leader, not just in fashion eCommerce, but in new categories including beauty, sport and homeware," said Kamani.
The administrators of Debenhams, FRP Advisory, confirmed the boohoo deal, adding: "The closing down sale will continue in stores for several weeks until the stock liquidation is completed and the value of this stock will be retained for creditors. Regrettably, all the UK stores will then be permanently closed."
Commented Geoff Rowley, joint administrator and partner at FRP: "I expect that the agreement with boohoo may provide some job opportunities but we regret that this outcome does not safeguard the jobs of Debenhams' employees beyond the winding down period."
ASOS, meanwhile, confirmed that it is in exclusive discussions with Arcadia's administrators over the acquisition of the Topshop, Topman, Miss Selfridge and HIIT brands.
"The board believes this would represent a compelling opportunity to acquire strong brands that resonate well with its customer base. However, at this stage, there can be no certainty of a transaction and ASOS will keep shareholders updated as appropriate," ASOS said.
Over the weekend, Sky News had reported that ASOS was the frontrunner to buy Topshop out of administration but won't buy any high street stores, being an online-only retailer.
The emergence of AIM-listed ASOS as a leading bidder for TopShop follows the withdrawal of FTSE 100 constituent Next from the bidding for Arcadia late Thursday last week.
JD Sports Fashion PLC, Frasers Group PLC and Boohoo Group PLC also have been reported as having an interest in acquiring Arcadia brands. On Saturday, Sky News said US retailer Authentic Brands Group LLC is working together with JD Sports. Sky also listed Shein, a Chinese fashion group, as being interested.
Asda - the UK supermarket chain being purchased from the US's Walmart Inc by the Issa brothers and UK-based private equity firm TDR Capital LLP for GBP6.8 billion - also is among the bidders, Sky said.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 19.83 points, 0.3% at 6,714.90
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Hang Seng: up 2.5% at 30,175.76
Nikkei 225: closed up 0.7% at 28,822.29
DJIA: closed down 179.03 points, or 0.6%, to 30,996.98
S&P 500: closed down 11.60 points, or 0.3%, at 3,841.47
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GBP: up at USD1.3719 (USD1.3665)
EUR: firm at USD1.2181 (USD1.2175)
Gold: down at USD1,803.40 per ounce (USD1,853.00)
Oil (Brent): firm at USD55.71 a barrel (USD55.55)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
G20 finance and central bank deputies meeting (virtual)
World Economic Forum's Davos Agenda virtual meeting opens with Chinese President Xi Jinping and BoE Governor Andrew Bailey
UK Bank of England publishes asset purchase facility quarterly report
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UK Prime Minister Boris Johnson is under growing pressure from Tory MPs to reopen schools in England amid warnings that children have become the "forgotten victims" of the coronavirus pandemic. Education Secretary Gavin Williamson is widely expected to confirm this week that there will be no return to the classroom after the February half-term break as ministers had hoped. Over the weekend, Health Secretary Matt Hancock refused to guarantee that they would be back before Easter, saying that infection rates would need to come down further. While the vaccine rollout was making "brilliant progress", he said the NHS remained under intense pressure and that any general easing of lockdown restrictions in England was a "long, long, long way" off. His comments were met with frustration among Tory MPs who had hoped that the vaccination programme would enable the controls to be eased from early March, by which time the most vulnerable groups should have received the jab.
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Transport for London will need at least two years of UK government support to be financially stable, an official has said. Andy Byford, commissioner of TfL, also suggested Crossrail, which will see the new Elizabeth line run from Berkshire to Essex via central London, may open sooner than the first half of 2022. TfL's finances have been hit by the coronavirus pandemic, leading to it requiring a GBP1.8 billion government bailout in November to keep services running until March this year.
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BROKER RATING CHANGES
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JPMORGAN RAISES EVRAZ TO 'OVERWEIGHT' ('NEUTRAL') - TARGET 650 (510) PENCE
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COMPANIES - FTSE 100
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AstraZeneca said its Calquence has been approved in Japan for adults with relapsed or refractory chronic lymphocytic leukaemia. In a separate release, the pharmaceutical firm said that results from a phase three trial showed Calquence met its primary endpoint demonstrating non-inferior progression-free survival for adults with previously treated, high-risk chronic lymphocytic leukaemia compared to ibrutinib. The Elevate-RR phase three trial also met a key secondary endpoint for safety, showing patients treated with Calquence had statistically significantly lower incidence of atrial fibrillation compared to patients treated with ibrutinib.
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COMPANIES - FTSE 250
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TI Fluid Systems reported an "exceptional" performance in the closing months of 2020. Revenue for 2020 is seen at EUR2.8 billion, and on a constant currency basis the performance is expected to be in line with the decline in global light vehicle production volumes. However, full-year adjusted earnings before interest and tax margin are estimated to be slightly better than expected. TI Fluid - which makes products that store and move fluids such as fuel and brake fluid around automobiles - declared an interim dividend of 6.74 euro cents per share but said it won't be paying a final dividend. "In light of the significant amount of the interim dividend now being declared and the anticipation that, despite exceptional operating and financial performance during 2020, adjusted net income for the 2020 financial year will be relatively low, the board has decided that it would not be practical to propose a nominal final year 2020 dividend under the dividend policy," the firm said, adding that it expects to return to its annual dividend policy in 2021. The company said it has entered the new year with "solid momentum".
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Professional services firm JTC said it performed well in the second half of the year and expects results in line with consensus expectations. New business performance in the year was "strong" despite the ongoing pandemic, with the annualised value of new business won increasing 20% to GBP17.9 million with "good momentum" in the fourth quarter.
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Monday's Shareholder Meetings
Cineworld Group PLC - GM re long-term incentive plan
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By Tom Waite; thomaslwaite@alliancenews.com
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