Tuesday, April 6, 1999 Published at 10:10 GMT 11:10 UK
Business: The Company File
Tie Rack sells up
The new business will loosen its ties with the Far East
The troubled UK retailer Tie Rack says it has agreed a £22.6m cash offer for a takeover.
The bidder is the family-owned Italian ties and scarves maker, Frangi.
This move is likely to be welcomed by Tie Rack investors who have seen the share price tumble over the past two years.
In 1997, they were over 200p, but a succession of profit warnings has seen them collapse to historic lows.
Knocked by the pound
Tie Rack has been hit hard by the Asian economic crisis and the impact on tourist spending of the strong pound.
The offer of 43.5p a share is pitched at a 24% premium to Tie Rack's last closing share price of 35p a share.
Simone Frangi, international director of the Italian bidder, said the deal "will bring significant benefits to the business of Tie Rack in an increasingly competitive international market".
He added: "Frangi intends to use its experience in the international fashion market an its relationship with leading European designers to revitalise the Tie Rack brand and product range."
In February, it said full-year pre-tax losses would be worse than expectations at around £7.5m before exceptionals.
"The company is going through a difficult period and we believe this cash offer represents good value for shareholders after taking into consid- eration the downside risks and the time it will take to achieve an acceptable level of profitability," said Tie Rack non-executive directors Gillian Oakes and David Spitz in a joint statement.
Loosening Far East ties
Frangi will make everything from the making to the selling of ties and scarfs.
The plan is to create different products for a range of countries.
"We are going to try to have different products for each country. So a lot of the shops are in America where we will try to concentrate on American trends which are very different from the UK or France or Japan," said Mr Frangi.
He added that the group would pull out of the Far East where trading has been particularly harsh.
Other loss-making shops in the group will get a second chance.
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