Hugo Boss's board has officially rejected the takeover bid from Frasers Group, considering the €38 per share offer to be too low and not reflective of the German fashion house's actual value or future growth prospects. This rejection comes after Frasers, the owner of Sports Direct, made a cash bid of approximately $2.3 billion (€2 billion) for the shares of Hugo Boss it doesn't already own. Frasers currently holds about a 26% stake in Hugo Boss.
The board of Hugo Boss stated that the proposed €38 per share significantly undervalues the company, especially given its ongoing strategic plan aimed at sustainable growth and increasing brand equity. The offer represented only a 4% premium to Hugo Boss's closing price on June 10, a figure that analysts at Citi had previously described as "modest," and which led to speculation that a higher offer might materialize. Bloomberg Intelligence analyst Charles Allen also noted that the offer seemed opportunistic and that shareholders were unlikely to accept it due to the small premium.
Frasers Group, led by billionaire Mike Ashley, has been actively acquiring fashion brands and repositioning itself to appeal to wealthier buyers. Analysts like David Hughes from Shore Capital viewed the Hugo Boss bid as strategic for Frasers, aiming to deepen its access to the premium menswear market. However, the Hugo Boss board believes the offer does not account for the significant progress made under CEO Daniel Grieder and Supervisory Board Chair Stephan Sturm, whose leadership Frasers had previously expressed support for in its bid announcement.
The rejection by Hugo Boss suggests that Frasers Group would need to significantly raise its offer if it wishes to gain full control of the premium brand. The initial offer price was also notably below some levels at which Hugo Boss CEO Daniel Grieder had purchased stock, including a January 2023 transaction averaging €57 a share and a January 2024 purchase just below €59, further indicating the board's perception of undervaluation. The situation sets the stage for potential further negotiations or a revised bid from Frasers.
