Clarks agrees £100m private equity deal

British shoe brand Clarks has agreed to sell a majority stake to a Hong-Kong based private equity company in a £100m deal, as the group’s founding family cedes control for the first time in its 195-year-old history.

C&J Clark, the company behind the brand, on Wednesday said LionRock Capital was set to become its largest shareholder with an investment that would help “grow the Clarks brand globally and most notably in China and across the rest of Asia Pacific”. 

The group had been grappling with heavy losses before the pandemic and recently launched a company voluntary agreement, an insolvency proceeding that allows businesses to renegotiate debts. Clarks called the CVA, through which it was hoping to cease rent payments on 60 of its 320 stores, an “absolute necessity”, but stressed it had not announced any store closures. 

Clarks has 230 shops in the UK and Ireland and has 1,265 stores and franchises globally, and in May announced it would cut more than 900 jobs worldwide.
The Clark family is set to maintain an undisclosed holding in the business after the £100m deal, which is contingent on a shareholder vote in December as well as the CVA for the brand’s stores in the UK and Ireland. Family members currently own 85 per cent of the company.

“The challenges to our business brought on by Covid-19 have meant that we need more resources and investment in order to fully deliver this strategy and safeguard the future of our business,” said chief executive Giorgio Presca, who was appointed in February. 

Mr Presca has pledged to transform the company, which has reported a sharp drop in profits in recent years and in 2019 impaired the value of its UK and US stores by almost £50m. In the year to February 2019, the last for which accounts are available, it made a £75.7m operating loss.

LionRock’s bid comes three decades after the group was embroiled in fractious buyout negotiations with properties commodities group Berisford International, which eventually failed to take the company public.

The battle for control took place as Clarks, much like many peers, started to manufacture its shoes outside the UK.

Clarks was in 1825 founded by brothers James and Cyrus Clark, who began selling a slipper made of sheepskin offcuts under their family name.

Daniel Tseung, founder and managing director of LionRock, said he looked forward to working with the Clark family. “We are extremely pleased to have the opportunity to partner with Clarks in expanding the company’s global operations and worldwide customer footprint,” he said.

Source: Financial Times