Frasers Group announces voluntary takeover offer for HUGO BOSS

Frasers is a long-term oriented investor in HUGO BOSS and continues to support Supervisory Board Chairman Sturm as well as CEO Daniel Grieder, it was said. However, Frasers rowed back on Tuesday this week and expressed support for Sturm and the dividend policy. Previously, Frasers had withdrawn its confidence in Supervisory Board Chairman Stephan Sturm in December. Disputes had included the dividend payment.

Market Reaction

For the remaining nearly 74 percent of HUGO BOSS shares, Frasers would have to shell out around 2 billion euros. The entire upscale outfitter would thus be valued at around 2.7 billion euros. The offer is not subject to a minimum threshold. Regulatory authorities still have to approve the deal.

The MDAX-listed HUGO BOSS share jumped: in XETRA trading, it rose at times by 6.14 percent to 38.70 euros. Already in after-hours trading on the Tradegate platform, the price had risen by more than six percent to over 38 euros after the offer was announced.

Analyst Assessment

JPMorgan analyst Chiara Battistini views the offer critically. The 38 euros offered did not appear particularly attractive. They included only a four percent premium over the current XETRA closing price. However, she sees no obvious other interested parties. Battistini also observed a comparatively high short ratio in the stock prior to the announcement of the Frasers offer.

Background: Frasers and the Stake in HUGO BOSS

Background on the player: Frasers is majority-owned by British billionaire Mike Ashley. Frasers also owns, among other things, the online retailer Sports Direct. According to a voting rights notification from July of the previous year, Frasers also holds financial instruments relating to HUGO BOSS shares. The British had sold so-called put options, meaning shares could have been tendered to them at a certain price by shareholders and holders of the options.

The offer applies to all shares that the Frasers Group does not already own and, according to the bidder, is voluntary. As such, it differs from a mandatory offer, which is automatically triggered upon exceeding certain ownership thresholds. Frasers had positioned itself in the past as a critical shareholder and clashed with HUGO BOSS's management on several points.

The fashion group HUGO BOSS, headquartered in Metzingen in Baden-Württemberg, is one of the best-known German clothing manufacturers and is listed in the MDAX. Should the Frasers Group successfully complete the takeover, it would be one of the largest transactions by which a British retail group has entered the German fashion and luxury goods market. The final valuation now depends on the course of the acceptance period and the attitude of the remaining shareholders.