Ted Baker Shares Soar on Reports of Private Equity Buyout

LONDON, United Kingdom — Shares in Ted Baker rose more than 15 percent on Monday after a newspaper reported that its founder Ray Kelvin could back a private equity buyout of the high street retailer, months after he resigned over claims he presided over a culture of "forced hugging."

Kelvin, who had been chief executive since the company's launch in 1988, has indicated that he would support a deal to take the company private under the existing management, the Sunday Times reported.

The deal speculation comes after Ted Baker's shares lost more than a quarter of their value last month when the retailer warned that underlying profit for the year would fall short of analysts' estimates after an "extremely difficult" start to 2019.

The warning underlined the task facing Lindsay Page, who was promoted to permanent boss in April as the high street retailer sought to move on from misconduct allegations against its leading shareholder Kelvin.

Ted Baker also reported its first drop in annual profit since 2008 in March as brick and mortar clothing chains suffered in the face of online competitors and as consumers reined in spending.

Ted Baker also faced some challenges with its spring and summer collections.

Kelvin resigned as boss of the firm in March to allow the fashion brand he founded to move on from misconduct allegations stemming from his habit of hugging colleagues. He has denied all allegations of misconduct.

Kelvin owns 34.9 percent of the company according to Refinitiv Eikon data, implying that any deal to buy Ted Baker could require his approval. His public relations firm declined to comment on the weekend speculation.

"Ted Baker has found trading tough for over a year, as the consumer climate has become more fragile, and the controversy surrounding Ray Kelvin put even more pressure on the share price," said CMC Markets analyst David Madden. "His possible support for a private equity buyout suggests that he sees further downside in the share price."

Another media report said Kelvin would ask Page to help him run the retailer if he took it private.

Ted Baker's shares were 13.3 percent higher at 949 pence at 0753 GMT, taking them to the top of London's midcap index.

Ted Baker opened its first store in Glasgow in 1988 with quirky details on suits, shirts and dresses helping the company stand out from rivals. The retailer has 560 stores and concessions globally.

Any deal would also come at a time when British retailers are facing a perfect storm of rising costs, slowing growth and the hit to uncertainty spurred by Britain's chaotic departure from the European Union.

Ted Baker declined to comment on the reports.

By Noor Zainab Hussain; editor: Louise Heavens.