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(Sharecast News) - Hugo Boss urged its shareholders on Thursday to reject an "inadequate" 1.7bn takeover bid by Mike Ashley's Frasers Group.
Frasers announced in June that it was launching a takeover offer for Hugo Boss. It said at the time: "Hugo Boss is a key brand partner for Frasers, and one of the top five brands across the Frasers group.
"Frasers is a long-term investor in Hugo Boss and remains supportive of both Stephan Sturm, the chair of the supervisory board, and Daniel Grieder, chief executive officer, in pursuit of their sustainable growth strategy whilst continuing to build brand equity.
"Frasers' board of directors believes that increasing Frasers' investment in Hugo Boss will create value for Frasers' shareholders."
However, the German fashion brand said in a statement on Thursday that the offer of 38 per share was "inadequate from a financial point of view". It noted the price represents only a marginal premium to the three-month average of 36.42 and a marginal premium to the closing share price 36.26 on the last trading day prior to the announcement.
"The managing board and the supervisory board recommend that Hugo Boss shareholders do not accept the offer," it said.
The company said the offer from Frasers - which owns a 26% stake - "fails to capture Hugo Boss' intrinsic value and medium-to long-term value potential".
Hugo Boss is currently executing the next strategic phase of its growth plan, 'CLAIM 5 TOUCHDOWN'. It said the plan sets the strategic course through 2028 and is designed to unlock the next phase of sustainable, profitable growth.
"The strategy is based on the ambition of outperforming the market and achieving an EBIT margin of around 12% over the medium- to long term," Hugo Boss said. "The program sharpens Hugo Boss' focus on becoming the leading premium, tech-driven, customer-centric 14 global fashion platform, with a clear emphasis on strengthening brand equity, elevating distribution quality, and enhancing operational excellence."
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