Frasers hits out at Boohoo’s Kamani over Mike Ashley appointment
Boohoo’s opposition to Mike Ashley and an associate joining its board “boils down” to its co-founder and executive vice chair Mahmud Kamani’s fears it would “dilute his influence,” Frasers Group has claimed in the latest open letter to the fast-fashion firm’s shareholders.
Frasers’ has previously urged Boohoo’s shareholders to vote to remove Kamani, after the latter snubbed Ashley’s efforts to become chief executive by appointing Dan Finley as its new boss last month. Ashley earlier this week said Kamani was “egotistical” and had an “unhealthy grip on the board.”
Frasers on Thursday also outlined new commitments intended to address conflict of interest concerns raised by Boohoo and two influential proxy advisers, Glass Lewis and Insitutional Shareholder Services (ISS), over the potential appointment.
But the letter, signed off by director Chris Wooton, said: “We are doing this despite the fact that Boohoo has grossly exaggerated any perceived conflicts and governance concerns as a thinly-veiled excuse not to appoint Mr Ashley and Mr Lennon as directors.”
It claimed the conflicts would not “cause real issues. Even the published opinion of a King’s Counsel made clear that there are no competition law issues with regards to Mr Ashley’s appointment.”
It comes after Glass Lewis on Wednesday came out against Frasers Group’s plans, joining a similar recommendation made by ISS earlier this week and ahead of a key shareholder meeting in eight days.
Both proxy advisers have backed Boohoo’s concerns that the appointment of Ashley and Lennon, a restructuring specialist, would create a conflict of interest. Frasers, which owns 28 per cent of Boohoo, also holds a stake in rival online retailer Asos.
“Frasers doesn’t do things by halves, so reach for the popcorn and wait for the drama to unfold, AJ Bell’s Dan Coatsworth said prior to Frasers’ most recent letter.
Ashley on Monday had accused Boohoo’s board of “gross mismanagement” and having “no clear strategy” to halt a decline which has seen the share price fall 90 per cent over the last five years.
The spat escalated the following day after Boohoo publicly urged shareholders to vote against what it described as a campaign by Frasers Group to “destabilise” and “disrupt” the company.
Glass Lewis said on Wednesday that while Ashley had attempted to address the potential conflict through certain commitments, it believed they “fall short of the level of protections that are necessary to sufficiantly guard against.”
Among the commitments outlined in Thursday’s letter were a willingness to “not be involved in decision-making at Boohoo in relation to Frasers.”
But it also refused a request from Boohoo to commit to having no intention to make an offer for the company or the purchase of any of its assets. “This is not a normal or appropriate request,” it reads.
“However, Frasers is willing to provide a statement that it will not purchase any of Boohoo’s assets unless a proper, fair and transparent process has been run independently by the Boohoo board, all key milestones are publicly disclosed, a fairness opinion is obtained from an independent adviser and Frasers emerges from this process as the best buyer.”
Glass Lewis has acknowledged that Frasers had “raised compelling points,” but argued Boohoo should be given the opportunity to turn itself around under new boss Dan Finley, who joined the group in November.
Boohoo has been contacted for comment.