Activist Investor Elliott Advisors Considers Takeover of Reiss Fashion Chain
Elliott Advisors, known for its corporate activism, is part of a group of potential buyers eyeing a takeover of Reiss, the British upmarket fashion retailer. The private equity firm has expressed interest in acquiring Reiss from its current shareholders, Next and Warburg Pincus.
Uncertainty Surrounds Elliott’s Bid for Reiss
It remains uncertain whether Elliott Advisors will formally submit a bid for Reiss, which was founded in 1971. The auction for the fashion chain involves at least three interested parties and is being overseen by Raymond James bankers.
Elliott’s Advantage: Familiarity with Reiss and UK Retail Sector
Elliott Advisors holds an advantage in the bidding process as one of its senior executives, Paul Best, played a key role in Warburg Pincus acquiring a stake in Reiss in 2016. With its ownership of Bantry Bay, a specialist lender with exposure to UK retailers, Elliott has a deep understanding of the UK retail sector.
Next and Warburg Pincus May Opt Not to Sell Reiss
There is a possibility that Next and Warburg Pincus, the current shareholders of Reiss, may decide against selling the fashion chain. One source suggests that Next may explore acquiring Warburg Pincus’s minority interest instead of selling its own 51% stake.
Reiss’s Value Estimated at £500m
Based on projected earnings, Reiss could be valued at over £500m. With expected earnings before interest, tax, depreciation, and amortization (EBITDA) of nearly £65m in the current financial year, the fashion chain attracts significant interest from potential buyers.
Next’s Potential Shift in Strategy and Reiss’s Growth Plans
Next, led by CEO Lord Wolfson, may make a significant move by selling its stake in Reiss, considering its successful track record in the retail industry.
Reiss, an “outstanding brand with enormous potential,” has already integrated its online operations with Next’s Total Platform. Reiss aims to expand its US presence and triple the number of stores in the coming years.