Asos has finalized a significant transaction involving the Topshop and Topman brands, entering into a joint venture with Heartland, which represents the Holch Povlsen family and Bestseller.
- The deal involves Asos selling a 75% stake in Topshop and Topman to Heartland for £135 million.
- In exchange, Asos maintains certain design and distribution rights, receiving a royalty fee for online sales.
- Heartland’s involvement is expected to be EBITDA accretive over time despite an immediate negative impact projected for FY25.
- The move aligns with Asos’ broader strategy amid new financial endeavors like a £250 million bond refinancing.
In a strategic decision, Asos has sold a 75% stake in the iconic Topshop and Topman brands to Heartland, the parent company representing the Holch Povlsen family and their business interests, for £135 million. This transaction forms a joint venture where Asos retains design and distribution rights. This agreement allows Asos to continue offering these brands online while generating royalities.
Despite the immediate financial impact, with a projected £10 million to £20 million negative effect on EBITDA for the fiscal year 2025, the executive team believes the deal will enhance profitability in the long run. The partnership grants Heartland significant control, yet maintains Asos’ involvement in creative and operational capacities, thus ensuring brand continuity and expansion.
José Antonio Ramos Calamonte, CEO of Asos, underscored the brands’ progress since their acquisition in 2021, affirming the joint venture’s potential to extend Topshop and Topman’s global reach. Meanwhile, Lise Kaae, Heartland’s CEO, expressed delight in this collaboration, highlighting its role in enhancing capital allocation and brand strength.
Alongside the stake sale, Asos has issued a trading update for fiscal year 2024, projecting adjusted EBITDA at the high end of the estimated range, albeit with sales falling slightly below expectations. Moreover, Asos commenced a £250 million bond refinancing effort, aiming to optimize its capital structure and solidify its financial footing.
This move marks a pivotal step in Asos’ strategic realignment, reinforcing its focus on sustainable growth and operational efficiency. The transaction is slated for completion in the fourth quarter of 2024, marking a new chapter in the company’s trajectory with Heartland as a key partner.
This strategic alliance with Heartland sets the stage for Asos to refine its business model and leverage new growth opportunities.
