Hugo Boss has urged its investors to reject what it calls an “inadequate” £1.7bn takeover offer tabled by Mike Ashley’s Frasers Group.
Frasers, the retail conglomerate behind Sports Direct and House of Fraser, currently holds around 26 per cent of Hugo Boss and launched a bid for full control last month.
The FTSE 250 group offered to pay nearly €2bn, equivalent to £1.7bn, or €38 per share, for the remainder of the German fashion house.
On Thursday, members of Hugo Boss’s management and supervisory board said they “unanimously recommend that shareholders do not accept” the offer.
Following a “comprehensive and independent review process,” Hugo Boss concluded that the deal would be “inadequate from a financial point of view.”
The firm consulted bankers at Bank of America and Goldman Sachs before determining the offer price fails to reflect its “standalone value” or “medium to long-term value creation potential.”
The four per cent premium offered by Frasers raised eyebrows among analysts, with stockbroker Panmure Liberum describing the offer as “modest” and suggesting Ashley’s group may not be seeking “full control.”
Hugo Boss said Frasers’ bid is designed merely to increase its shareholding and that Ashley’s group “does not envisage specific changes or measures affecting current business activities” of the firm.
In December, Hugo Boss launched a strategic overhaul aimed at delivering “sustainable, profitable growth” and accelerating cash generation across its operations.
The fashion house expects currency-adjusted sales to fall by mid to high single digits this year as a result of a “deliberate realignment,” before returning to growth in 2027.
Its sales fell by six per cent year on year to €905m in the first quarter of this year, as it reaffirmed full-year earnings targets of between €300m and €350m.
Despite the revenue decline, Hugo Boss insisted it remains on track to become “the leading premium, tech driven, customer centric global fashion platform.”
Acquiring full control of Hugo Boss would significantly accelerate Frasers’ long-pursued ambition to establish a stronger foothold in high-end fashion.
Frasers installed chief executive Michael Murray on the supervisory board of Hugo Boss last year, and later warned it would vote against any future dividend payments proposed by the firm.
The group launched a takeover bid for luxury bagmaker Mulberry in 2024, but was rejected after the firm’s owner reaffirmed confidence in its own turnaround plan.
Last year, Ashley also failed in his bid to join the board of fast-fashion giant Boohoo, in which Frasers remains the largest shareholder.
Frasers opened flat at 731p on Thursday while Frankfurt-listed Hugo Boss edged up 0.2 per cent to €37.