Acquisition of Warburg Pincus’ Interest in Reiss Sep 1, 2023
NEXT plc (“NEXT”) announces that it has agreed1 the terms of a transaction whereby NEXT and the Reiss family will acquire the entirety of Warburg Pincus’ (“WP”) 34% interest in the Reiss Group (“Reiss”) for total consideration of £128m on a fully diluted basis. The transaction is subject to customary conditions including regulatory approvals.
Upon completion of this transaction, which is subject to the satisfaction of the conditions and expected to take place in mid-October 2023, NEXT’s holding in the Reiss business will increase from 51% to 72%. The Reiss family’s holding will increase to 22% and the Reiss management team will hold 6% equity in the business. Following completion of this transaction, Reiss’s results will be consolidated into the NEXT plc accounts.
The transaction will not materially impact the NEXT Group’s underlying profit before tax or EPS in the current year. However, there will be a non-recurring, non-cash, exceptional gain in the NEXT Group accounts reflecting the increased value of its investment in Reiss and its consolidation into the NEXT Group accounts in accordance with IFRS3 (Business Combinations). For clarity, this is an accounting gain and does not contribute to the underlying profitability of the Group. Further details of this transaction will be set out in our Half Year Results announcement on 21 September.
Today’s announcement follows a period of strong continued growth for Reiss under the leadership of CEO Christos Angelides. In the year to 28 January 2023, Reiss achieved total sales of £324.6m, an increase of 26.4% on the prior year. Profit before tax in the same period was £51.6m2, an increase of 50.5% on the prior year.
Christos Angelides was appointed CEO of Reiss in 2017 and will remain in that role. Christos previously worked for NEXT for 28 years, serving 14 years on the NEXT plc Board as Group Product Director. Reiss will continue to retain its own Board of Directors, Reiss management will retain autonomy and creative independence and the business will continue to be headquartered in London.
Reiss’s websites and online operations, both in the UK and overseas, remain contracted to NEXT through NEXT’s Total Platform which went live in February 2022 and which has served as a launch pad for Reiss’s growth both in the UK, and overseas.
Simon Wolfson, NEXT Chief Executive said: “Reiss has performed exceptionally well since we first invested in March 2021. This success has been driven by the strength of its brand, first class management and the benefits of Total Platform; we look forward to continuing to develop the business with Christos and the Reiss team. Warburg Pincus has been an excellent partner throughout the term of our investment and we have enjoyed working with them during the last two years.”
Adarsh Sarma, Managing Director and Rianne Schipper, Principal, Warburg Pincus said: “Warburg Pincus is proud to have supported Reiss through its growth journey since 2016. We would like to thank Christos, Jonathan and the management team for their unrelenting hard work and commitment - they have done an outstanding job, consistently demonstrating category-leading performance. We have also been delighted by our partnership with NEXT and the way in which NEXT’s Total Platform has accelerated growth and enhanced the performance of the business.”
Christos Angelides, Reiss Chief Executive said: “We are appreciative of the excellent partnership with Warburg Pincus over the past seven years – their expertise has been instrumental to our sustained development and they have been a strong and trusted partner. We look forward to continuing to focus on creating authentic and timeless collections for our customers and over the next few months we will be launching a number of new initiatives that will both expand the breadth and choice of our collections worldwide.”
Raymond James served as financial advisor to Reiss. Kirkland & Ellis served as legal advisor to Warburg Pincus. Slaughter and May served as legal advisor to NEXT. nmelaw served as legal advisor to the Reiss family. Fried, Frank, Harris, Shriver & Jacobson served as legal advisor to the Reiss management team.
As NEXT is currently in a Closed Period its employees will not be available for comment. Please direct all questions to Alistair Mackinnon-Musson at Rowbell PR.
[1] NEXT entered into binding agreements to effect the transaction on 21 August 2023.
[2] Reiss Holdings Limited consolidated accounts for the year ended 28 January 2023.
About NEXT
NEXT plc (LON: NXT) is a FTSE 100 company based in Leicester and is one of the UK’s leading online clothing retailers. NEXT has around 460 stores in the UK and Eire and an online presence in over 70 countries selling the NEXT brand and over 700 other fashion, home and beauty brands, including Reiss.
About Reiss
Reiss is a modern fashion house creating attainable luxury collections for men, women and children, since 1971.
From its birthplace in London to now being present in over 18 countries and 266 points of sale, Reiss is synonymous with being timeless, authentic and with a focus on quality. A truly global brand, Reiss offers a complete wardrobe.
About Warburg Pincus
Warburg Pincus LLC is a leading global growth investor. The firm has more than $83 billion in assets under management. The firm’s active portfolio of more than 250 companies is highly diversified by stage, sector, and geography. Warburg Pincus is an experienced partner to management teams seeking to build durable companies with sustainable value. Founded in 1966, Warburg Pincus has raised 21 private equity and 2 real estate funds, which have invested more than $112 billion in over 1,000 companies in more than 40 countries. The firm is headquartered in New York with offices in Amsterdam, Beijing, Berlin, Hong Kong, Houston, London, Luxembourg, Mumbai, Mauritius, San Francisco, São Paulo, Shanghai, and Singapore. For more information, please visit www.warburgpincus.com.