This week in 2004, the City accepted Tom Singh’s bid to delist New Look, the chain he founded in 1969, in a deal worth around £700 million…
Singh’s offer, backed by Apax and Permira, of 348p a share represented a premium of 63% against the company’s then 12 month-low and netted Singh a reported £74m.
Then chief executive Stephen Sunnucks (now European president of Gap) was overlooked as part of the management buyout team, he stepped down and Phil Wrigley was duly promoted to the role.
Neither Apax nor Permira would have predicted what was to come though. In 2007, the private equity firms put New Look on the market for around £2 billion (three times what they paid in 2004) but withdrew the fast fashion chain from sale after failing to attract a “satisfactory” bid - £1.7bn was said to be as close as it got.
A little over a year later and the credit crunch hit and debt levels dried up meaning the private equity firms have had to hold on to this investment for perhaps longer than they planned. Fortunately for them though New Look is outperforming the rest of the market in the recession. It emerged as one of the biggest winners at Christmas. Rumours persist that the chain will be put back on the market this year, although that would seem unlikely given the current economic situation.