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Ted Baker's stock lifted by reports of founder's buying out the company

By Angela Gonzalez-Rodriguez

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Business |ANALISYS

New York – Ted Baker's shares jumped earlier this weeks on the news reports that the fashion retailer’s founder, Ray Kelvin, was considering buying out the company.

Kelvin, who quit as chief executive in March in the wake of allegations of inappropriate behaviour, owns 35 percent of Ted Baker. The polemic executive is said to be in full support of a buyout to take the company private and work with its existing management, reports the British press.

Ted Baker’s stock's price has halved since January

In the wake of the news, shares in the preppy fashion label gained 13.5 percent Monday, closing at 951 pence apiece. Noteworthy, the share price has more than halved since early January following the publication of two profit warnings, as it described “extremely difficult” trading conditions.

Back in March, the company's market valuation was 1.4 billion pounds. Now, the company is now valued at 424 million pounds, with Kelvin’s stake being worth 148 million pounds.

"Ted Baker's pair of profit warnings, perceived corporate governance woes and slumping share price have all had analysts wondering whether the firm was open for a bid," said commenting the news Russ Mould, investment director at stockbrokers AJ Bell. He added that Kelvin is the most logical bidder for the firm, should one ever appear: "With the private equity industry awash with cash, such funding should be around for anyone prepared to back Mr Kelvin's judgement."

"While the buyout will surely be a good thing for Ray Kelvin, for other shareholders the question remains: what is the motive to keep the company's shares as part of their portfolio?" wonders Fiona Cincotta, Senior Market Analyst at Cityindex.

Picture: Ted Baker media gallery

Ted Baker