1. News
April 12, 2019

Arcadia Group buys back 25% stake in British fashion retailer Topshop

Arcadia Group, Sir Philip Green’s retail firm, has re-acquired 25% stake in British fashion retailer Topshop and Topman (TSTM) from US private equity firm Leonard Green & Partners as part of its plans for a major restructure.

Sir Philip Green’s retail firm, Arcadia Group, has re-acquired a 25% stake in British fashion retailer Topshop and Topman from US private equity firm Leonard Green & Partners, as part of its plans for a major restructure.

The restructuring plan includes the closures of under-performing stores, as well as halving payments for its pension fund to save the business from collapse. Its cash contributions to its pension scheme is more than £500m in deficit, reported BBC.

Leonard Green & Partners acquired the stake in Topshop and Topman, reportedly for £350m, in 2012.

Five years later, the firm had written the value of its investment down to nil, implying that Arcadia did not have to pay to re-acquire the stake this week, reported The Guardian. The re-acquisition of the stake is expected to allow Arcadia to proceed with its store closure plans through a company voluntary arrangement (CVA).

“The transfer simplifies the shareholding structure of TSTM and enables the Arcadia board to focus on the restructuring options currently being considered.”

Last month, reports emerged about Sir Philip Green exploring a CVA as part of the Arcadia turnaround plan.

In the last 18 months, several retailers in the country, including New Look, Mothercare and Carpetright have opted for CVAs to downsize their chains and reduce rental costs to offset declining sales and rising costs.

The Guardian quoted Leonard Green & Partners saying: “The transfer simplifies the shareholding structure of TSTM and enables the Arcadia board to focus on the restructuring options currently being considered.

“Leonard Green remains supportive of the business and has the opportunity to repurchase its stake in TSTM in the future.”

Leonard Green and Partners’ two representatives from the Arcadia’s board have also resigned from their positions, according to Businessleader.co.uk.