Frasers Group, the fashion retailer owned by Mike Ashley, has increased its stake in Hugo Boss to 30.28 per cent, crossing the mandatory bid threshold under German takeover rules and intensifying pressure on the German fashion house to accept its £1.7bn proposal.
The group, which owns Sports Direct and Flannels, announced on Tuesday that it had acquired 2.5 million additional shares in Hugo Boss, lifting its total holding above the 30 per cent threshold that compels a shareholder to launch a bid for the entire company.
Frasers Confirms Mandatory Bid Trigger
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," City AM reported. The group put forward a €38 per share offer for Hugo Boss last month, placing a value of nearly €2 billion on the fashion brand. FTSE 250-listed Frasers Group already held approximately 26 per cent of Hugo Boss when it launched its bid.
The €38-per-share proposal raised questions amongst analysts as it represented merely a four per cent premium on Hugo Boss's share price at the time of the offer. Shares in the German fashion house have subsequently risen above €38, having jumped more than nine per cent on the day Frasers submitted its offer.
Hugo Boss Rejects Offer as Inadequate
Hugo Boss has urged its investors to reject this "inadequate bid." The offer is set to expire on Monday 27 July. Earlier this month, members of Hugo Boss's management and supervisory board declared they "unanimously recommend that shareholders do not accept" the offer. Following a "comprehensive and independent review process," the German fashion house concluded that the proposal would be "inadequate from a financial point of view."
The company said it sought advice from bankers at the Bank of America and Goldman Sachs before determining that the offer price failed to reflect either the "standalone value" of Hugo Boss "nor its medium to long-term value creation potential."
Frasers' Takeover Strategy Drives Recovery
Last week, Frasers disclosed that its string of takeover bids—including a hostile approach for Australian footwear retailer Accent—is driving its recovery. The group's stakes in Hugo Boss and Accent contributed £50 million to adjusted profit over the past year, it confirmed.
The FTSE 250 company recorded an eight per cent rise in revenue to £5.3 billion for the year ending April, while pre-tax profit surged by more than a third to £528 million.
