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Pjilip Green Sells Topshop Stake to Fund Global Expansion

Billionaire Arcadia Group Owner Philip Green
Billionaire owner of the Arcadia fashion business Philip Green said, “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.” Photographer: Simon Dawson/Bloomberg

Philip Green, the billionaire owner of Britain’s Arcadia fashion empire, sold a 25 percent stake in the Topshop and Topman retail chains to raise 500 million pounds ($805 million) of firepower for international expansion.

The sale to Leonard Green & Partners LP, a Los Angeles-based private-equity firm that co-owns the J Crew fashion brand, values the chains at 2 billion pounds ($3.2 billion), the 60-year-old entrepreneur said today in a statement. The price tag was double the amount expected, reflecting the strength of the brands, according to Nick Bubb, an independent retail analyst.

Green, based in Monaco, plans to step up investment in the U.S. and globally to double the size of the Topshop and Topman business over the next three to four years, he said in a Bloomberg Television interview today. He entered the U.S. in 2009 with a Topshop store in Manhattan and has plans for 20 outlets in the country, adding to concession spaces inside Nordstrom department stores.

Further expansion “would have been difficult if he tried to do it alone,” said Honor Westnedge, an analyst at Verdict Research, making the stake sale “a necessary move.”

Green plans to hold talks with Nordstrom in Seattle next month about expanding the Topshop business in the U.S., he said in an interview on Bloomberg Television.

“Since we started it’s been very strong,” he said.

Debt Free

The stake sale will give Arcadia flexibility to pursue expansion either independently or in partnership with Leonard Green, according to the statement. Philip Green has been quiet on the acquisition front since 2005, when he bought the Etam chain in the U.K. A year before that he made an unsuccessful attempt to buy Marks & Spencer Group Plc, the U.K.’s largest clothing retailer, for 9.1 billion pounds.

The billionaire said last month he may spend 5 billion pounds on an acquisition should the opportunity arise.

“If something turns up that we like, we might do it,” he said. “We’re in a position where we could look at anything.”

Today’s transaction leaves both Topshop and Arcadia free of bank debt and with positive cash balances, the retailer said. Arcadia owner Taveta Investments Ltd. reported net debt of 308.9 million pounds at the end of its last financial year.

Leonard Green counts Jo-Ann Stores Inc. among its retail investments. The private-equity firm has “a lot of experience of the U.S., they know the customer, the areas they should have a presence,” Westnedge said.

Arcadia, which also includes the Dorothy Perkins, Evans and Miss Selfridge brands, reported last month that pretax profit climbed 25 percent in the year ended Aug. 25 as it offered fewer discounts. Green bought the business in 2002, and also owns the BHS department store chain, which he bought in 2000.

The London-born executive owns more than 615 global franchise stores.

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