Hugo Boss shares jump as it ‘thoroughly examines’ Frasers’ takeover offer

Shares in Hugo Boss jumped nearly 10% on Thursday after the company said it would “thoroughly examine” a near-€2bn takeover approach from the Sports Direct owner Frasers Group.

Mike Ashley’s fashion and sportswear business has pounced on the German fashion house, in which it already owns just over a 26% stake, saying late on Wednesday that it was offering about €1.98bn (£1.73bn) to take full control .

The offer equates to €38 a share in cash, representing a 4.3% premium to Wednesday’s closing price. Hugo Boss shares rose 9.8% to €40.05 on Thursday. Frasers shares fell 2.5% in early trading but then bounced back by 1.6%.

Frasers has been steadily building its stake since 2020. Hugo Boss, Germany’s biggest luxury fashion group, generated €4.3bn in sales last year.

The growing stake has fuelled years of speculation that Frasers could seek a takeover of the German brand as part of a broader push upmarket.

Hugo Boss said late on Wednesday that the approach had not been not coordinated with the company and that its board would review the offer, which values the business at €2.7bn.

The company said: “The managing board and the supervisory board will thoroughly examine the offer and issue a reasoned statement, acting in the best interests of the company, its shareholders, employees and customers.”

The deal would bring Hugo Boss into the retail empire controlled by Ashley, whose Frasers Group owns Sports Direct, House of Fraser, the Flannels designer clothing chain and the Savile Row tailor Gieves & Hawkes. It also has shareholdings in other British retailers including Asos, Debenhams and Currys.

JP Morgan Chase said the bid would set a near-term floor for the shares but warned there was limited scope for further gains, adding that it did not expect a rival bidder to emerge.

Hugo Boss, whose shares are about half of what they were worth three years ago, has struggled with weaker sales since a post-Covid boom. The company has embarked on a turnaround strategy that includes store revamps, a streamlined product range and the expansion of its womenswear offering.

Last year, Michael Murray, the Frasers chief executive and Ashley’s son-in-law, joined Hugo Boss’s supervisory board, but he was not involved in the decision to make an offer, according to Frasers.

Aside from its direct stake, Frasers also owns options due to vest in the next two years that could result in it having a majority stake in the German company.

Frasers described Hugo Boss as a key brand partner, adding that it “remains supportive” of both the chair, Stephan Sturm, and Daniel Grieder, the chief executive, in pursuit of their suitable growth strategy.

Analysts at Jefferies said: “Given the limited premium, explicit support for incumbent Boss leadership, and disclosure that the offer was made ‘to facilitate further investment’, we think this is ostensibly to improve Frasers’ investment flexibility, rather than an intention to take full ownership of Boss.”

David Hughes, a consumer analyst at Shore Capital, said: “Frasers has spent several years repositioning parts of the estate upmarket, with Flannels central to its aspiration to become a more credible destination in premium fashion.

“Full ownership, or at least effective control, of Hugo Boss would deepen Frasers’ access to a globally recognised premium menswear and lifestyle brand, strengthen brand partnerships across the group and potentially give it greater influence over product, distribution and presentation in a channel where brand scarcity and execution matter.”