Mike Ashley's Frasers Group launches takeover bid to 'gobble up' Hugo Boss

Mike Ashley’s retail vehicle, which currently owns around 26 per cent of Hugo Boss, said it is offering to pay around 1.98 billion euro (£1.73 billion) for the remainder of the business to take full control.

The offer would see Frasers pay 38 euro per share to shareholders in the fashion firm.

Shares in the group were worth 36.44 euro at the close of trading on Wednesday.

It comes after speculation in recent years that Frasers could seek a takeover of the brand, having steadily built up its stake since first investing in Hugo Boss in 2020.

Frasers’ chief executive Michael Murray is a member of Hugo Boss’s supervisory board as a result.

Bosses at Frasers stressed that Mr Murray “did not participate in the board’s discussion of, or decision to make, the offer”.

The offer is now expected to go to a shareholder vote.

The UK retail giant, which has a current market value of around £3.45 billion, said it would hope to complete the deal in the second half of this year if it is approved and receives regulatory approvals.

In a statement, Frasers said: “Hugo Boss is a key brand partner for Frasers, and one of the top five brands across the Frasers Group.

“Frasers is a long-term investor in Hugo Boss and remains supportive of both Stephan Sturm, the chair of the supervisory board, and Daniel Grieder, chief executive, in pursuit of their sustainable growth strategy whilst continuing to build brand equity.

“Frasers’ board of directors believes that increasing Frasers’ investment in Hugo Boss will create value for Frasers’ shareholders.”

Victoria Scholar, head of investment at interactive investor, said a rise in Hugo Boss shares which followed the announcement of the offer “suggests investors believe an improved offer or a rival bid could emerge with the former of the two looking more likely”.

Speaking on Thursday, she added: “Frasers Group has a long history of building up stakes in struggling retailers over time, with several UK acquisitions bought out of administration.

"Hugo Boss’s share price has declined in recent years, down almost 50 per cent from its 2023 highs, suffering since the post-pandemic boom.

"However the difference this time is that Hugo Boss is a German brand, with a strong global reputation that has been delivering improved results lately thanks to a fruitful turnaround plan, although sales and profits still fell in the first quarter highlighting how there is still a lot of work to do.

"Frasers Group shares are down today but are up 13 per cent so far this year.”

AJ Bell investment director Russ Mould said: “The market seems displeased that Frasers has gone all-in with plans to gobble up Hugo Boss.

“Frasers has form in snapping up bargains and Hugo Boss ticks the right boxes for a business trading on a cheap valuation and in need of salvation. However, Frasers typically does pre-pack deals to cherry pick assets when a business goes into administration. That method typically means it gets a bargain and isn’t on the hook for any unwanted extras.

“Hugo Boss is down but not out. Sales are in decline, but margins are improving, and it is picking up business from high-value shoppers trading down from expensive luxury brands.

"Frasers is increasingly going upmarket and obviously sees the potential to use Hugo Boss’ brands to accelerate this plan.”