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Philip Green sells Topshop stake

by Jonathan Braude  |  Published December 6, 2012 at 10:07 AM
British retail tycoon Philip Green said Thursday, Dec. 6, he sold a quarter of his profitable fashion business Topshop/Topman Ltd. to Los Angeles private equity investor Leonard Green & Partners in a deal valuing the business at £2 billion ($3.2 billion).

The £500 million investment goes to Topshop/Topman's parent company, Green's privately held Arcadia Group Ltd., allowing it to pay off its net debt, which stood at £309 million at the end of the company's 2011/2012 financial year.

However, the investment does not give Leonard Green either a stake in Arcadia itself or the group's other brands. These include variety-store chain Bhs and young women's fashion chain Miss Selfridge.

"Both Topshop/Topman and the rest of the Arcadia Group now have no bank debt and are in positive cash," Green said in a statement. "Being debt free gives us the balance sheet and flexibility to look at other opportunities to consolidate or acquire, either on our own or in partnership with LGP, who have substantial capital available in their new fund."

This is the first time that Green has accepted outside investment in the family-owned Arcadia Group since he bought it for £840 million in 2002. But in Thursday's statement he said that months of discussions with Leonard Green had convinced him that a partnership would be very beneficial.

"Their experienced management teams and knowledge of retail in the U.S.A. will greatly assist Topshop/Topman with their global expansion."

Arcadia does not release separate financial information for Topshop/Topman, although they are considered the jewels in the group's crown. Under Green's ownerhip, Topshop's flagship store on London's Oxford Street has become a favored haunt of fashion editors and celebrities in search of cutting-edge clothes at a snip.

Arcadia as a whole generated cash of £330 million last year on sales of £2.7 billion and operating profit, before goodwill, of £225.4 million. Total same-store sales were down 0.7% year-on-year, but e-commerce sales were up 22%.

Leonard Green's investments in the retail sector include Whole Foods Market Inc., J. Crew Group Inc., Neiman Marcus Group Inc., Petco Animal Supplies Inc. and Container Store.

Arcadia had not replied to a request for more information by press time, Thursday.

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Tags: Arcadia Group Ltd. | Bhs | Container Store | J. Crew Group Inc. | Leonard Green & Partners | Miss Selfridge | Neiman Marcus Group Inc. | Petco Animal Supplies Inc. | Philip Green | Topshop/Topman Ltd. | Whole Foods Market Inc.

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