Takeover speculation surrounding discount fashion retailer New Look as fuelled today by news that founder Tom Singh had begun talks with lenders about raising finance to take the company private.
Singh, who is a non-executive director and founded the group in 1969, announced last month that he had appointed financial advisers to review options for his family’s 28% stake in the business.
In a statement from Deutsche Bank, which is acting on behalf of Singh, it emerged that talks with providers of finance were at an early stage.
Deutsche added: “It is emphasised that the strategic review and those discussions with possible financiers remain at an early stage.
“A further announcement will be made if circumstances require.”
New Look shares, buoyed by takeover speculation, soared to 315p by close of trading on Friday but were off 2p today despite the announcement.
The company has previously been linked in reports to a possible management buyout while City analysts have suggested private equity financiers are also circling the company, which recently snapped up French value retailer NewMim.
The latest announcement has been interpreted as a sign that Singh, whose family wealth was estimated at £250m by the Sunday Times Rich List earlier this year, could be lining up a deal to retake control of New Look.
The company, which is the UK’s third largest women’s clothing retailer, is already considered to be in play as a serious acquisition target – possibly for foreign predators looking for a route into the UK.
Analyst Rhys Williams at stockbroker Seymour Pierce said Singh could be looking at putting together a buyout with New Look’s management team.
But he added that Singh could just as easily decide to offload his stake in the business, which floated in 1998.
Williams said: “What we do know is that with a limit as to how far banks will lend, and the fact that New Look has limited property, we believe any bid to arrive will be around the 320p mark.”
That would value the group at £640m.
Weymouth-based New Look has nearly 500 shops and is planning to pilot menswear ranges in 10 stores this autumn as it seeks to fill a gap in the market for cheaper menswear.
References: EGi News 04/08/03
