The £1.7bn takeover bid launched by Mike Ashley's Frasers Group has been met with a resounding rejection from the management and supervisory boards of German luxury fashion brand Hugo Boss, who have urged their investors to spurn the offer. This decision follows a comprehensive review process conducted in conjunction with bankers at Bank of America and Goldman Sachs, which concluded that the bid price significantly underestimates both the company's standalone value and its medium-to-long-term growth potential.
Frasers Group, the retail conglomerate behind Sports Direct and House of Fraser, currently holds around 26% of Hugo Boss shares. The proposed takeover would see Frasers increase its stake in the business to a commanding majority, with an offer price equivalent to approximately £1.7bn or €38 per share.
Hugo Boss is presently undergoing a strategic overhaul aimed at driving 'sustainable, profitable growth' and boosting cash generation. Despite this, the company still anticipates a mid-to-high single-digit percentage decline in currency-adjusted sales for 2024 due to deliberate adjustments made to realign its operations. First-quarter sales for this year have already reflected this trend, decreasing by six per cent year-on-year to €905m.
Notably, Hugo Boss reaffirmed its full-year earnings targets of between €300m and €350m, despite the anticipated short-term decline in sales. For Frasers Group, gaining full control of Hugo Boss would mark a significant step towards expanding its presence within the high-end fashion market – an objective that has long been at the forefront of Mike Ashley's ambitions.
Frasers' bid for Hugo Boss has drawn scrutiny from analysts, with stockbroker Panmure Liberum questioning whether the modest four per cent premium offered might indicate a lack of urgency to acquire full control. The fashion house itself has stated that Frasers' bid is primarily designed to increase its stake in the business and does not foresee significant changes to Hugo Boss's current operations.