The Memo: Another one bites the dust: Next Plc’s acquisition of amidst economic turmoil

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Weekly Roundup 21st November 2022: Another one bites the dust: Next Plc’s acquisition of amidst economic turmoil

Amy Howe - 21st November 2022

Earlier this month, furniture retailer went into administration. What was once seen as the UK’s most promising start up, founded in 2010, has become the latest casualty of the UK’s current economic downturn. But it seems not all are feeling the same pinch. Since the furniture retailer’s collapse, retail giant Next has swooped in to acquire’s brand, website, and intellectual property. The sale cost Next £3.4 million pounds a complete bargain when you consider that when the furniture retailer went public on the London Stock Exchange just a year ago, it was valued at around £775 million. 

Amidst the backdrop of company insolvencies in England and Wales soaring to an all-time high in almost 13 years, Next has been steadily building out its retail portfolio. In 2021, it bought a 25% stake in high street retail rival Reiss, which at the time was valued around £33 million. Warburg Pincus, the private equity firm that held the majority stake in Reiss, was advised on the sale by Freshfields. Just a few months ago, the Next upped this stake to 51% - a majority holding. April this year saw Next acquire a 44% stake in JoJo Maman Bébé, a baby clothing and maternity wear retailer. Next up, the retail giant has its sights set on British clothing company Joules, which fell into administration just a few days ago. In August this year, it was reported by Bloomberg that Next would potentially acquire up to a 25% stake in Joules. 

Next’s string of acquisitions is a story that aspiring M&A solicitors may be interested in following. Such transactions can often be long and complicated, and involve different strands of the law, including employment, competition, and tax. For example, on the employment front, the deal Next struck on its acquisition of did not include staff, resulting in around 400 redundancies. In this instance, there are legal concerns over the layoffs, which were allegedly made via Zoom. Aticus Law says it has been approached by a number of staff in relation to compensation claims.