Asos has finalised the transaction transferring ownership of Topshop and Topman brands to Heartland.
- Heartland, representing the Holch Povlsen family’s interests, now owns 75% of the venture.
- Asos retains a 25% stake, allowing it to maintain design and distribution rights.
- The agreement may temporarily impact Asos’s EBITDA negatively but promises long-term benefits.
- This strategic step by Asos aims to enhance its balance sheet quality.
Asos has officially completed the sale of the well-known fashion brands, Topshop and Topman, to Heartland, a company that manages the business interests of the Holch Povlsen family through their enterprise, Bestseller. The transaction now sees Heartland holding a significant 75% share in the newly formed joint venture, known as 24.8.2024 Limited. The total valuation of this stake is estimated at approximately £135 million.
In retaining a 25% stake in the joint venture, Asos has ensured that it maintains certain design and distribution rights for the Topshop and Topman brands. This enduring relationship allows Asos to continue offering these brands online, subject to a royalty fee payable to Heartland. The strategy enables Asos to keep the brands within their online portfolio despite the partial ownership transfer.
The financial implications of the sale were discussed by Asos in September when plans for the deal were initially revealed. The company anticipated a potential negative impact on their EBITDA for the financial year 2025, forecasting a decline within the range of £10 million to £20 million. However, Asos has expressed optimism regarding the future financial benefits, indicating that the deal will become increasingly EBITDA accretive over time.
Heartland, the acquiring firm, functions as a holding company that deals with the wider interests of the Holch Povlsen family. Bestseller, their family business, is a major player in the retail sector. Industry analysts have remarked that this sale by Asos is likely a tactical move aimed at improving the quality of the balance sheet, thereby fortifying the company’s overall financial health.
The sale of Topshop and Topman to Heartland represents a strategic financial decision for Asos with anticipated long-term benefits.
