Next PLC (LSE:NXT) (Next PLC (LSE:NXT)) is in talks about the sale of fashion chain, Reiss, according to reports, as part of a deal that could value it at more than £500mln.
Sky News said the high street retailer and its fellow Reiss shareholder, Warburg Pincus, are working with bankers on an auction of the business, which was founded in 1971 by David Reiss.
Raymond James (NYSE:RJF) (Raymond James (NYSE:RJF)), the investment bank, is overseeing the sale process, Sky said.
Exclusive: Next and Warburg Pincus, the buyout firm, are working with investment bankers at Raymond James on a potential sale of Reiss, the high street affordable luxury fashion chain; a transaction could value Reiss, founded in 1971, at more than £500m. https://t.co/4oyT87FzEX
— Mark Kleinman (@MarkKleinmanSky) June 13, 2023
City sources said on Tuesday that the auction was in its second round, with a number of buyers circling, Sky added.
Based on expected earnings before interest, tax, depreciation and amortisation in the current financial year of almost £65mln, Reiss could be valued at in excess of £500mln, according to the sources.
But Sky said a person close to Next cast doubt on whether it would ultimately sell its 51% stake, while a senior retail executive suggested that it may be using the process to establish a market price and then acquire Warburg Pincus's remaining interest.
It bought an initial 25% stake in Reiss in 2021, making a £33mln equity investment to buy shares from Warburg Pincus.
Last summer, it exercised an option to take majority ownership of the chain by snapping up a further 26% shareholding.