Frasers Group has increased its stake in German fashion brand Hugo Boss to nearly 48%, falling short of a complete takeover but significantly advancing its strategy to expand in the luxury sector.
In an update to investors, Frasers announced that 17.6% of Hugo Boss shareholders accepted its offer of €38 per share. Frasers initially launched a £1.7 billion takeover bid in early June when it held a 26% stake in the company. The bid aimed to push its shareholding above the 30% threshold, which would trigger mandatory takeover bid rules under German law.
Hugo Boss's management and supervisory boards had previously deemed the offer "inadequate from a financial point of view" and recommended shareholders reject it. Stephan Sturm, chair of Hugo Boss, acknowledged Frasers Group's "continued long-term commitment" and expressed anticipation for a "constructive relationship" with the company as its largest shareholder.
Frasers, a FTSE 250 retailer, has been steadily building its stake in Hugo Boss since its initial investment in 2020. The German brand's products are stocked in Frasers' Flannels and Frasers stores. The move to increase its stake follows Frasers' recent acquisition of the luxury department store chain Harvey Nichols for £40 million. This acquisition is part of Frasers' broader "elevation strategy," designed to enhance its presence in the luxury market, building on the success of its Flannels brand.
Axel Rudolph, chief technical analyst at IG, commented that Frasers now controls "almost half of the German fashion group, putting it firmly in the driving seat as it looks to increase its influence." Rudolph added that the figures suggest Frasers' "long-running interest in Hugo Boss is continuing to move closer to its ultimate objective."
Frasers also recently acquired a 4.1% stake in Burberry, further signaling its commitment to investing in high-end fashion firms. Mike Ashley, the founder of Frasers, had reportedly hoped to install his son-in-law and Frasers boss, Michael Murray, as the chief executive of Hugo Boss. Murray has indicated that integrating Harvey Nichols will require "tough choices" and a potential short-term reduction in business size.
Frasers' shares saw a 1.2% increase, reaching 804p, contributing to a 20% gain year-to-date.