Mike Ashley’s Frasers ups stake in Hugo Boss as takeover pressure mounts
Frasers Group has pushed its stake in Hugo Boss above the threshold forcing it to make an offer for the whole firm, piling pressure on the German fashion house to accept its £1.7bn bid.
The fashion group, which owns Sports Direct and Flannels, said on Tuesday that it had bought 2.5m new shares in Hugo Boss, taking its total stake up to 30.28 per cent.
According to German takeover rules, a shareholder must make a bid for the entire company if their shareholding reaches the 30 per cent mark.
Frasers said it was “pleased to confirm that it has exceeded the mandatory bid threshold,” adding that its existing bid “remains open for shareholders to accept”.
Frasers piles pressure on Boss
The group, which was founded by billionaire Mike Ashley, tabled a €38 per share bid for Hugo Boss last month, valuing the fashion brand at nearly €2bn.
But Hugo Boss has urged its investors to refuse this “inadequate bid”. The offer will expire on Monday 27 July.
FTSE 250-listed Frasers Group already owned about 26 per cent of Hugo Boss when it launched its bid last month.
The €38-per-share offer raised eyebrows among analysts because it constituted only a four per cent premium on Hugo Boss’ share price at the time of the bid.
Shares in the German fashion house have since risen above €38, having climbed more than nine per cent on the day Frasers tabled its offer.
Hugo Boss slams ‘inadequate’ offer
Earlier this month, members of Hugo Boss’s management and supervisory board said they “unanimously recommend that shareholders do not accept” the offer.
After a “comprehensive and independent review process” the German fashion house has concluded that the deal would be “inadequate from a financial point of view”.
The firm said it consulted bankers at the Bank of America and Goldman Sachs before deciding that the offer price neither reflects the “standalone value” of Hugo Boss “nor its medium to long-term value creation potential”.
Last week, Frasers revealed that its spree of takeover bids – which included a hostile move for Australian shoe firm Accent – is fuelling its turnaround.
The group’s shareholdings in Hugo Boss and Accent added £50m to adjusted profit in the last year, it said.
The FTSE 250 firm saw revenue jump by eight per cent to £5.3bn in the year to the end of April, as pre-tax profit grew by more than a third to £528m.