Made.com: The Rise, Fall & Acquisition. How did HSF, Eversheds Sutherland & Davis Polk advise on the deal?
What is Made.Com?
Made.Com is a home & furnishings retailer, they have two showrooms in the UK but are more well known for their online shop. The business was started in 2010 by Lastminute.com founder Brent Hoberman and serial entrepreneur Ning Li.
Made.com was estimated to employ around 700 members of staff at the end of 2021 and saw a rise in sales throughout the pandemic due to more people shopping online and taking time in lockdowns to redecorate their homes. in 2020 sales hit £315m, a 30% rise from the previous year.
Following this success, Made.Com went public, with the CEO stating "A listing in London, where the business was founded, will enable us to accelerate our growth.” and aimed to quadruple annual sales to £1.2bn by the end of 2025.
The IPO
Unfortunately, the IPO was not particularly successful. The business was given a market capitalisation of 775m with share being priced at 200p per share. At the time, one banker commented for the FT saying that this was "disappointing" as this was at the lower end of prices that had been discussed, with some valuing the business at up to £1b. By the end of their first day on the market, the share price had fallen by 8% at 186p per share. Made.com sold 50m new shares in the IPO, managing to raise £100m, while existing investors including co-founder Ning Li and Brent Hoberman sold 46.9m shares.
The Collapse
In September 2022, Made.Com announced that they were putting themselves up for sale, just 16 months after their IPO. They admitted that they were struggling to raise fresh equity and blamed the impact of supply chain issues and a collapse in UK consumer confidence. At the end of October 2022, headlines rumouring the collapse of made.com hit the news. At this time, an article in the FT discussed the possible companies that may be interesting in acquiring Made.com, including Frasers & John Lewis. At this time Made.Com's shares fell another 32 per cent and the group’s market capitalisation stood at just £15mn against an estimated requirement of at least £50mn in new funding.
A month later, Made.Com made business news headlines as they were on the brink of collapse. The company halted new orders as discussions of finding a buyer failed. Their share prices also plummeted to just 0.5p per share, a fall of around 93%. The business made other recent efforts to save money such as laying off over a third of their workforce.
Early in November it was announced that Made.com had officially gone into administration.
The Acquisition
Administrators from PWC were brought in to help Made.com and began with the task of selling the company's other assets and paying off its debts to creditors. On the 9th November, it was announced that Next would be acquiring the brand, domain names and intellectual property of Made.com for £3.4mn. The transaction with Next excludes the company’s remaining inventory, which is likely to be sold off by PwC.
Lawyers from Herbert Smith Freehills (HSF), Eversheds Sutherland and Davis Polk had advisory roles in both the administration and the sale of Made.com to Next. HSF was drafted in to advise with the administration. The HSF team was led by London restructuring partner John Chetwood with corporate support from fellow London partners Ben Ward and Caroline Rae.
Eversheds has been enlisted as Next’s counsel, with a team spearheaded by corporate partner Robin Johnson, insolvency partner David Gray, privacy partner Dave Hughes and a team of associates. Davis Polk is advising Made.com in a corporate capacity – the US firm’s London team has historically represented the retailer, most notably on its £775.3m IPO in 2021.
Things to consider after reading this article are:
Why was Made.com's IPO in summer 2021 not successful?
What specific tasks would the lawyers at each firm (HSF, Eversheds Sutherland & Davis Polk) involved with when working on the deal?
Why would Next want to acquire the brand, domain names & IP of Made.com?
SOURCES/FURTHER READING
https://www.ft.com/content/fda46bfa-dd6a-40ac-a277-8089a65c7d80
https://www.bbc.co.uk/news/business-57494549
https://www.ft.com/content/b03a399f-141c-4516-a002-1e4c764d2a0a
https://www.bbc.co.uk/news/business-63403363
https://www.legalbusiness.co.uk/blogs/hsf-davis-polk-and-eversheds-complete-the-set-ofas-next-acquires-collapsed-made-com/
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