December 6, 2012 / 4:50 PM / in 5 years

Philip Green sells Topshop stake to U.S. group

LONDON (Reuters) - British retail billionaire Philip Green has sold a 25 percent stake in Topshop and Topman to a U.S. private equity firm for 350 million pounds ($563 million) to help accelerate the chains’ overseas expansion.

Monaco-based Green’s Arcadia Group said on Thursday the stake had been sold to Leonard Green & Partners (LGP) following a courtship lasting several months.

Green told Reuters LGP was paying the money for the quarter interest in the newly formed entity TOPSHOP/TOPMAN Limited, which is able draw on 600 million pounds of debt - but has not yet.

“We’ve received 350 million pounds and we can draw another 600 million pounds ... We don’t need that money today,” he said, adding the two parties valued the new entity at 2 billion pounds.

The deal is Green’s most significant since he failed for a second time to buy Marks & Spencer (MKS.L) in 2004.

LGP, whose other investments include U.S. fashion retailer J Crew and department store chain Neiman Marcus, would not be involved in the management of Topshop and Topman.

“They’re totally hands off, they’re a financial investor, will help us with anything we want help with. They know the American market, know all the people we need to know,” said Green.

“Everybody’s always saying what a graveyard America is for British retailers. They’ve been exceptionally successful and they said ‘we’ll buy a corner and we’ll help you develop’.”

Green said LGP’s investment was locked in for a minimum of five years.

He declined to comment on what the private equity firm’s exit strategy might be. “This is day one of the romance,” he said.

    The funds received from LGP mean Arcadia, which also owns Bhs, Burton, Dorothy Perkins, Miss Selfridge, Wallis and Evans, is now debt free, having ended its 2011-12 year with debt of 309 million pounds.

    “Being debt free gives us the balance sheet and flexibility to look at other opportunities to consolidate or acquire, either on our own or in partnership with LGP,” it said.

    Green bought department store chain Bhs for 200 million pounds in 2000 and Arcadia (including Topman and Topshop) for 850 million pounds in 2002.

    He has said he is not averse to doing another major deal if the right one crossed his table.

    Last month Arcadia reported a 25 percent rise in 2011-12 pretax profit.

    ($1 = 0.6214 British pounds)

    Reporting by James Davey; Editing by Mark Potter

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