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(Alliance News) - ASOS PLC on Monday said it has acquired four brands from beleaguered Arcadia Group Ltd, including UK high street staples Topshop and Topman.
ASOS will pay GBP265 million for the four brands - including Miss Selfridge and HIIT as well - and also buy GBP30 million in stock upfront. HIIT was a sub-brand of menswear retailer Burton, which ASOS has chosen not to acquire.
The online retailer is only buying the stock and the brands, so the physical stores still will close.
ASOS shares were up 3.3% at 4,620.00 pence each in London on Monday morning.
The deal does mean roughly 300 jobs will be saved "across design, buying and retail partnerships".
"As part of the integration process, we will undertake a thorough review of the supply chain to ensure it complies with all our 'Fashion with Integrity' principles," ASOS added.
The AIM-listed firm said the acquisitions represent a "compelling strategic opportunity" to become "the number one destination for fashion loving 20-somethings worldwide". ASOS said they are strong brands that would resonate with its key customer base, with brand equity strongest in the UK and an established presence in both the US and Germany, two of the company's key markets.
"We anticipate incremental sales in FY22 to be broadly flat to FY20 acquired brand sales as we focus on driving growth on our ASOS platform and through select strategic retail partnerships. The acquisition is expected to be margin accretive, with strong operating leverage given the relatively low incremental costs of operation once integrated onto the ASOS platform. We expect the transaction to deliver a double-digit return on capital (post tax) in the first full year," ASOS said.
The GBP265 million acquisition sum will be fully-funded from ASOS's existing cash resources, the company added.
"We are extremely proud to be the new owners of the Topshop, Topman, Miss Selfridge and HIIT brands. The acquisition of these iconic British brands is a hugely exciting moment for ASOS and our customers and will help accelerate our multi-brand platform strategy. We have been central to driving their recent growth online and, under our ownership, we will develop them further, using our design, marketing, technology and logistics expertise, and working closely with key strategic retail partners in the UK and around the world," Chief Executive Officer Nick Beighton said.
Philip Green's Arcadia Group went under back in November, putting 13,000 jobs at risk.
Since then, JD Sports Fashion PLC, Frasers Group PLC and Boohoo Group PLC also were reported as having an interest in acquiring Arcadia brands. Last month, Sky News reported ASOS was the frontrunner after FTSE 100-listed retailer Next PLC pulled out of the race.
The UK high street continues to suffer from restrictions to control Covid-19. Like Arcadia Group, department store chain Debenhams also sunk into administration.
ASOS's AIM-listed peer boohoo in January announced a deal all of the intellectual property assets of Debenhams Retail for GBP55 million in cash. In addition, the company on Friday said it is in exclusive talks to buy Dorothy Perkins, Wallis and Burton, a trio of brands which were also part of Arcadia.
By Eric Cunha; ericcunha@alliancenews.com
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