William Baird MBO loses Alchemy support

Usually not shy to take on tough deals, bidder Alchemy is put off by Baird’s debt provisions.

Alchemy Partners, the UK private equity firm and turnaround specialist, has withdrawn its 75 pence a share take over offer for William Baird, the textile manufacturer that has been hit hard by problems at its main customer, high street chain Marks & Spencer.

The offer had valued the business at nearly £88m (E137.8m). Yesterday the deal fell apart over what William Baird described in a statement as “disagreement with Alchemy as to the value implications of net indebtedness at the end of December, confirmed at approximately £19.3m.”

This figure is understood to include a significant provision for shutting down the Baird Clothing division which lost its main contract as a supplier to M&S last year.

Commenting on the significance of Baird’s financial situation, Alchemy was to the point. “The debt figures were out of control”, partner Martin Bolland told eFinancial News, a website.

Having arrived at this conclusion last week, Alchemy had lowered its offer to 65 pence a share, a move deemed unacceptable by Baird’s independent directors and advisers. However both sides have indicated that there remains a possibility of the talks reopening some time later this year. Alchemy already owns a 30 per cent stake in the business.

Baird shareholder's took badly to the news of the abandoned rescue operation. On Wednesday the share price lost 11 per cent to close eat 56 pence.

The offer was abandoned less than a year after Alchemy spectacularly withdrew its bid for Rover, the UK carmaker, after failing to agree terms with Rover’s parent BMW.