ASOS Forms Joint Venture with Heartland to Revive Topshop and Topman Brands
British fashion e-commerce company ASOS issued a statement that it has reached an agreement after a "competitive sale process" to set up a joint venture with Dutch fashion retail investment giant Heartland to take over ASOS's British high street fashion brands Topshop and Topman.
Heartland will contribute £135 million in cash (approximately 1.25 billion yuan) and hold 75% of the joint venture through its subsidiary Aktieslskabet.
Heartland is the investment and holding company of the family of Danish business tycoon Holch Povlsen, whose assets include fashion group Bestseller, and indirectly holds a 28% stake in ASOS.
According to the British "Sky News" news, ASOS's stake in the joint venture is 22.5 percent, and the remaining 2.5 percent is held by the U.S. high-end department store chain Nordstrom. ASOS had previously signed a contract with Nordstrom to continue selling Topshop products through the latter's stores.
The joint venture will grant ASOS "partial design and distribution rights" for the Topshop and Topman brands on a licensed basis, and ASOS will continue to sell and market the two brands through online channels.
In February 2021, ASOS announced that it would pay £265 million plus £30 million for inventory to buy the high street fashion brand Topshop and three other brands Topman, Miss Selfridge and HIIT from the Arcadia Group in bankruptcy.
Pippa Stephens, a senior analyst at research firm GlobalData, welcomed the joint venture between ASOS and Heartland, saying the agreement "will help raise awareness and regain traction for these brands."
She explained that the Topshop and Topman brands "have been largely forgotten by consumers since they were acquired by ASOS." ... Because their product ranges are buried among the thousands of products and other third-party brands on the ASOS website."
ASOS said the transaction is expected to have a negative impact of £10 million to £2,000 on the company's earnings before interest, tax, depreciation and amortisation (EBITDA) in the 2025 financial year. But the board "unanimously concluded" that the transaction was in the best interests of shareholders.
The joint venture will relaunch e-commerce site Topshop.com within six months of completion, but there are no immediate plans to expand offline stores, ASOS CEO Jose Antonio Ramos Calamonte said. Both the Topshop and Topman brands have made good progress, and the joint venture with Heartland is a recognition of the potential of the brands, and we believe this partnership will help introduce and reach more customers around the world."
Jose Antonio Ramos Calamonte said: "This is an important step in ASOS 'continued transformation. The launch of the joint venture and the refinancing will accelerate our strategy to provide our customers with the best and most relevant products and to position Asos as a company for sustainable profitable growth."
"ASOS will continue to focus on what we do best - designing the best fashion and providing a fashion destination. Through the joint venture, we can explore new opportunities both online and offline, and we are excited to continue to participate in the future of the brand while also achieving the best value structure for ASOS shareholders today, "Jose Antonio Ramos Calamonte further noted.
In conjunction with the announcement of the joint venture, ASOS also announced a refinancing plan, including the issuance of approximately £250m of convertible bonds maturing in 2028 and the use of some of the cash to buy back £500m of convertible bonds maturing in 2026. ASOS also announced the extension of its loan financing agreement with Bantry Bay Capital until May 2027, with an additional 12-month extension option.
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