(June 11): Frasers Group Plc offered to buy the rest of Hugo Boss AG for about €2 billion (US$2.3 billion or $2.6 billion) as billionaire Mike Ashley seeks to add another fashion brand to his growing collection.
The owner of Sports Direct made a cash bid of €38 a share for the German label known for its premium-priced suits, casual attire and underwear. That’s a premium of 4% to the closing price on Wednesday. The British retail group already owns a roughly 26% stake in Hugo Boss.
The move sent Hugo Boss shares up as much as 7% on Thursday, the highest intraday level since December.
Hugo Boss said it will “thoroughly examine” the unsolicited offer from Frasers, whose shares fell nearly 2% in early trading in London Thursday.
Frasers’ approach, valuing Hugo Boss at €2.7 billion overall, seems opportunistic and it’s unlikely that shareholders will accept it given the small premium, said Bloomberg Intelligence analyst Charles Allen.
He added that it’s “not obvious what levers Frasers could pull to speed recovery” at the German fashion brand, which is attempting a turnaround after being hit by soft demand in China and persistent weakness in womenswear.
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Still, alternative counter-bids are unlikely to emerge, Bankhaus Metzler analyst Felix Dennl said in a note.
The offer price is also below some levels at which Hugo Boss chief executive officer Daniel Grieder bought stock during his time in charge, including a January 2023 transaction averaging €56 a share and a January 2024 purchase just below €59.
Frasers, which is majority owned by Ashley, has long sold Hugo Boss products in its stores and online. Last year, Frasers chief executive officer Michael Murray, who is Ashley’s son-in-law, joined Boss’s supervisory board.
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Full ownership would give Frasers direct control over strategy and capital allocation after the two companies clashed in recent months. Frasers threatened last year to vote against any proposed dividend for Boss shareholders, arguing that cash should be invested in long-term growth instead. It also said last year that it no longer supported supervisory board chairman Stephan Sturm, a stance it reversed on Tuesday.
In Wednesday’s filing, Frasers said it “remains supportive” of both Sturm and Grieder.
Frasers’ stake in Hugo Boss consists of a mix of directly held shares and options which will vest over the next two years. Analysts at Morgan Stanley suggested Frasers might be trying to increase its holding without triggering a mandatory takeover, likening the situation to UniCredit’s “voluntary public exchange offer” that nudged its stake in Commerzbank over the 30% threshold without a full takeover.
“We note some similarities may be plausibly drawn with UniCredit and Commerzbank and could be aimed at complying with the regulatory requirement while providing Frasers with increased flexibility,” Grace Smalley, analyst at Morgan Stanley wrote in a note to clients.
Frasers, which owns London tailor Gieves & Hawkes as well as sports brands such as Slazenger, has a reputation for growing large stakes in other retailers and often using that holding to influence decisions at board level. It has recently taken an interest in the struggling German sports brand Puma SE.
Its involvement has frequently led to clashes. In a spat with online fast-fashion chain Boohoo Group Plc, Frasers accused co-founder and executive chairman Mahmud Kamani of wrecking the retailer’s value and tried to remove him as a director. It also tried to block Boohoo from changing its name to Debenhams earlier this year.
At Hugo Boss, Grieder has streamlined product assortments and tightened cost controls. It’s his second turnaround attempt since taking over in 2021.
Frasers declined to comment beyond the filing.
Uploaded by Magessan Varatharaja
