Goldman Sachs angry over New Look

The auction of UK fashion chain New Look seems to be degenerating into acrimony over Merrill Lynch’s alleged tactics in marketing the deal to the City.

Merrill Lynch, which is running the auction, is reported to have infuriated fellow bankers Goldman Sachs over alleged claims of its interest in New Look.

On June 5, Goldman Sachs publicly denied any interest in purchasing the fashion chain. It appears that Goldman may have attempted to put together a consortium to buy the company some weeks ago. It then apparently, had a disagreement with Merrill Lynch over the auction process and walked away.

The two private equity owners, Apax and Permira, were hoping to sell the business for around £2bn (€2.95bn). Initially, Blackstone, PAI, CVC, Landmark Group, TPG and Warburg Pincus were all reported to be circling the UK fashion retailer.

Subsequently, TPG and Warburg Pincus joined forces, which is thought to have put off other potential bidders from pursuing the business. These two have so far been reluctant to offer more than about £1.7bn (€2.5bn).

If this deadlock continues, New Look is likely to go through an aggressive refinancing, although it is thought that the management team, which has already been through one refinancing, is not keen on a second.

The failure of Apax and Permira to get their desired price tag is due no doubt to growing nervousness regarding the retail sector in general, but more specifically to the early stage of its expansion outside the UK.

According to a source close to the deal: “Apax and Permira have been following a dual-track progress with New Look from the beginning and have already secured an aggressive recap package. The relatively high price tag put on the business is predicated on the future overseas expansion of the retail chain outside of the UK, which many potential bidders might feel has yet to be proven.”

Sandrine Bradley