New Look agrees £699m Singh takeover

The board of New Look, the revamped high street retailer, yesterday recommended a long-awaited offer of £699m for the company by its founder, Tom Singh. The move will trigger the departure of New Look's chief executive, Stephen Sunnucks, who has been widely tipped to be the next head of clothing at Marks & Spencer.

Mr Sunnucks would leave New Look with £6.85m in shares and options he has accumulated during his years at the group. He would also get compensation for loss of office, though that has to be worked out.

Last year, Mr Sunnucks, who is on a one-year contract, was paid £421,000. He doubled his salary after hitting performance targets. He also had benefits of £31,745. Mr Singh, who founded New Look 34 years ago with a store in Taunton, Somerset, is backed by private equity firms Apax and Permira in his 348p-a-share bid for the company.

New Look's shares jumped 6.75p to 344.25p. There is a feeling some retailers have been snapped up by private buyers at bargain-basement prices, but analysts said Mr Singh's price looked reasonable.

Rhys Williams, at Seymour Pierce, said: "That is a fair price. We would not expect anyone else to pay it, especially after New Look's like-for-like performance. In comparison, when Debenhams was taken over, it was trading well."

Debenhams was bought by Baroness Retail, a private equity consortium, last year. Despite a major makeover and having its flagship store on Oxford Street revamped, New Look disappointed the City last month when it revealed Christmas trading had been down 5 per cent on the previous year.

The offer yesterday confirming he was pressing ahead has come as a proposed scheme of arrangement. The approach, which needs court approval, allows bidders to impose a tighter timetable on deals than are allowed by the Takeover Code.

Mr Singh hopes to tie the deal up by early April. Under its terms, the Singh family would end up with a 23 per cent stake in the new company, called Trinitybrook. The private equity groups will have 31 per cent each and the management team a further 8 per cent.

The bid is at a 10 per cent premium to the share price on 1 August when the takeover bid was launched. It is 36 per cent above the price on 7 July last year when speculation over Mr Singh's bid first emerged.

Martin Clarke, at Permira, said: "Value fashion is one of the fastest growing segments of clothing retail. We believe New Look has outstanding potential for further growth."