July 17, 2024

The Domestikated Life

One Passion

Hong Kong buyout firm Lion Rock steps into Clarks bidding war | Business News

A Hong Kong-based private equity firm has stepped into the refinancing of Clarks, the shoe retailer, as part of talks that could lead to the chain ending two centuries of majority family ownership.

Sky News has learnt that LionRock Capital, which has backed companies such as Internazionale, the Serie A football club, and the ride-hailing app Hailo, is one of two remaining bidders for a stake in Clarks.

Discussions about a deal are expected to conclude in the next month, and are said to include a rival bid from Alteri Investors, a firm which specialises in providing capital to troubled retailers.

Sources said that any transaction was likely to involve the Clark family retaining an equity stake in the business, although it could be reduced to below 50%, depending on the progress of the talks.

Sky News revealed in May that the footwear chain was in discussions about a share sale, with between £100m and £150m likely to be injected into the business as part of any deal.

In May, Clarks’ new chief executive, Giorgio Presca, unveiled a strategy – dubbed ‘Made to Last’ – that will aim to steer it into its third century of operation.

His plans involve 900 job losses, with 200 new roles being created.

Clarks said in a statement that as part of the new strategy it was “currently reviewing options to best position our business, our people and the Clarks brand for future long-term growth”.

A triumvirate of accountancy firms are working on a restructuring of Clarks as it tries to weather the coronavirus outbreak’s impact on the high street.

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The chain’s family shareholders have drafted in KPMG to advise them, while Deloitte has been hired by the company’s management team.

PricewaterhouseCoopers had been engaged by a syndicate of the footwear chain’s lenders as they assess the COVID-19 crisis’s impact on its prospects.

Rothschild, the investment bank, is also advising the company.

The string of appointments come after a difficult period for Clarks, which was founded in 1825 and has become synonymous with generations of parents buying their children’s first pair of shoes.

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It remains largely owned by descendants of Cyrus and James Clark, who founded the business in Somerset nearly 200 years ago.

Clarks trades from about 345 stores in the UK, employing thousands of people, but has denied that it will be exploring a Company Voluntary Arrangement – a widely used insolvency mechanism that would – if approved by creditors – pave the way for a radical restructuring.

The company has furloughed thousands of its store staff under the government’s Coronavirus Job Retention Scheme.

In the last year for which figures are available, Clarks reported a post-tax loss of more than £80m.