Online fashion retailer ASOS has signed a binding agreement with Heartland’s subsidiary to create a new joint venture (JV) which will acquire the Topshop and Topman (TSTM) brands.
The agreement will see Heartland holding a 75% interest in the venture for £135m ($177m), with ASOS retaining a 25% stake.
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The strategic move is expected to impact Asos’s earnings before interest, taxes, depreciation and amortisation negatively by between £10m and £20m in the fiscal year 2025 (FY25) but is anticipated to become increasingly accretive over time.
The transaction, which values the TSTM brands at £180m, is subject to antitrust approvals and set for completion in the fourth quarter (Q4) of 2024.
Asos Holdings Limited (AHL) reserves the right to sell an additional 5% interest to Heartland for £9m.
Asos will obtain design and distribution rights for the brands, ensuring their continued online presence.
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By GlobalDataThe board of Asos has expressed unanimous support for the transaction, citing the benefit to customers and alignment with the company’s Back to Fashion strategy.
The sale is also expected to strengthen Asos’ balance sheet while allowing it to participate in the future growth of the TSTM brands.
ASOS plans to re-launch Topshop.com within six months post-completion and explore expansion through wholesale partners.
Asos has also unveiled a refinancing plan to address weak sales, with annual sales expected to fall slightly below the forecasted 15% decline.
The company is offering £250m in convertible bonds due in 2028, and repurchasing part of its £500m bond due in 2026.
ASOS CEO José Antonio Ramos Calamonte said: “The joint venture and the launch of the refinancing will accelerate our strategy to both offer customers the best and most relevant product and to turn ASOS into a company that delivers sustainable, profitable growth.
“Topshop and Topman have made good progress since we acquired the brands in 2021. The new JV with HEARTLAND is testament to the brands’ potential and the partnership will help bring Topshop and Topman to more customers globally.
“Through the JV, new opportunities, both online and offline, can be explored and we are excited to continue to be part of the brands’ future while also realising the best value structure for Asos shareholders today.”
In March 2024, Asos announced an 18% decrease in sales for the first half of FY24.
