Hugo Boss has urged shareholders to reject Mike Ashley’s £2.3bn takeover bid, with the German fashion giant’s board calling Frasers Group’s offer “adequate” and set at the lowest price allowed by law.
The board said on Thursday that the 38 euro (£32.40) dividend failed to reflect the company’s value and future potential, and recommended investors reject it. The market seems to agree: Hugo Boss shares are currently trading at €37.89 and have changed hands above the offer price in recent weeks.
The rejection is the latest twist in a saga that began when Frasers, who own 26 percent of Hugo Boss, launched a formal takeover bid last month. German takeover laws require any investor with up to 30 percent of shares to make an offer to all remaining shareholders.
Frasers said the offer was a legal requirement if it wanted to raise its investment, saying it was designed to “facilitate investment by Frasers”. The group says it supports the current management of Hugo Boss and will not make any changes to the company if the request is accepted.
Hugo Boss had a similar view on the purpose of the bid, saying in its official response that the offer was “designed to enable Frasers Group to increase its ownership”.
That didn’t reduce the price decision. The bid, which Frasers said was the final one, was the lowest it could make. It will see Frasers pay €2bn for the 74 per cent of Hugo Boss it does not own, valuing the company at €2.7bn.
Stephan Sturm, chairman of the company, said: “After a thorough and independent review, we have concluded that the offer price is financially insufficient and fails to adequately reflect the value of Hugo Boss and its future potential.”
He added: “We look forward to maintaining a constructive relationship with Frasers Group as the single largest shareholder of Hugo Boss.”
For UK business owners and entrepreneurs, this episode is a key stage in patient development. Frasers has been investing in Hugo Boss since 2020, part of an “elevation strategy” that has moved the group from reduced clothing to labels such as Gieves & Hawkes and Flannels, and more recently to struggling sportswear outfit Puma.
Mr Ashley owns 74 per cent of Frasers, formerly Sports Direct before the House of Fraser takeover that saved the department store from collapse. The group also owns Evans Cycles and Jack Wills. Ashley stepped down from the Frasers board in 2022, handing over the business to his son-in-law Michael Murray, although the group’s appetite for cash has been on the wane since then.
There are two studies of small firms watching from the sidelines. First, a well-constructed small stake buys influence long before it buys control; Frasers spent six years earning his seat at the table in Metzingen. Second, limiting the offer to a minimum order invites this very response. The minimum bidding the law allows for a business whose shares trade above your value is rarely a recipe for enthusiasm.
Hugo Boss, promoted by David Beckham and Naomi Campbell, is a major German luxury label. Shares in Hugo Boss and Frasers were unchanged.
Investors have until July 27 to decide whether to accept the offer.
