Mike Ashley-controlled retail conglomerate Frasers (LON:FRAS) has launched an all-cash takeover offer for Antipodean sportswear seller Accent (ASX:AX1). Australia’s largest footwear retailer is Frasers’ partner in expanding Sports Direct into Australia, where 30 new stores are planned.
British billionaire Mike Ashley is in the midst of one of his particularly deal-hungry moods. The £166 million offer for Accent comes hot on the heels of Fraser’s £1.7 billion bid for Hugo Boss (ETR:BOSS). The German fashion retailer is a key brand partner for the FTSE 250-listed Frasers.
Putting the Accent on growth
Sports Direct-owner Frasers currently holds 22.9% of Accent’s share capital. Frasers is offering to buy the remaining shares through an on-market offer on the Australian Securities Exchange at A$0.65 a share. In response, Accent is reviewing the ‘unsolicited’ bid and urging shareholders to take no action.
Accent is a shoe and athleisure retailer founded in 1988 and operates hundreds of stores across Australia and New Zealand. The company trades under retail banners including Platypus Shoes, Hype DC, The Athlete’s Foot and Glue Store.
Accent also holds exclusive distribution rights in the region for global footwear brands including HOKA, Timberland, Skechers and Dr Martens (LON:DOCS).
Despite these strengths, Frasers has expressed dissatisfaction with Accent’s recent performance after the company cut H2 operating profit guidance by 11% in May. The assumption is Fraser and the mercurial Ashley want more control over Accent’s growth strategy and performance.
Another low-ball offer
Charles Allen is senior retail analyst at Bloomberg Intelligence. He argues Fraser’s bid for Accent, ‘like its approach to Hugo Boss, doesn’t look designed to succeed as it’s priced at the June 12 close’.
Allen explains: ‘Though the bid – its second low-ball offer in five days – represents a premium to recent lows, it’s 63% below Frasers’ average in-price of A$1.76. The on-month offer period, the statutory minimum, also suggests the bid is intended to provide greater flexibility in building a stake.’
The offers for Accent and Hugo Boss represent retail tycoon Ashley’s latest moves to expand his sprawling Frasers empire.
Besides Sports Direct, House of Fraser and Flannels, the group controls Jack Wills and Evans Cycles. Frasers also owns stakes in a slew of other retailers. These range from ASOS (LON:ASC) and Debenhams (LON:DEBS) to Currys (LON:CURY).
Only last week, Frasers launched a £1.7 billion bid for struggling Hugo Boss as the conglomerate continues its long-running push into luxury fashion. Frasers already owns upmarket names House of Fraser, Flannels and Savile Row tailor Gieves & Hawkes.
Acquiring full ownership, or taking effective control, of Hugo Boss would give Frasers greater access to a global premium menswear and lifestyle brand. Frasers is the biggest shareholder in Hugo Boss with a 26.1% stake and is offering €38 in cash for the remaining shares.
Hugo Boss’ weak share price has left it vulnerable to a takeover. The German fashion group has been grappling with declining sales and recently set out a turnaround strategy focused on store revampsmand further expansion of its womenswear offer.
Read the press release here: https://frasers.group/financials/shareholder-information
