By Elsie Kamsiyochi
German luxury fashion house Hugo Boss has urged its shareholders to reject a €2 billion ($2.3 billion) takeover offer from Britain’s Frasers Group, arguing that the proposal significantly undervalues the company and fails to reflect its long-term growth potential.
The company described Frasers’ cash offer of €38 per share as “financially inadequate,” saying the bid does not represent the true intrinsic value of the Hugo Boss brand, its financial strength, or its future prospects. According to the company, the offer merely reflects the minimum price Frasers was legally required to pay after increasing its ownership stake rather than a genuine assessment of the business’s market value.
Chief Executive Daniel Grieder reaffirmed the company’s confidence in its long-term strategy, stating that Hugo Boss has a clear roadmap for growth, a solid financial foundation, and strong opportunities to create greater value for shareholders in the years ahead. Management believes accepting the current offer would deprive investors of the benefits expected from the company’s ongoing transformation.
Frasers Group, controlled by British businessman Mike Ashley, already owns around 26% of Hugo Boss. Under German takeover regulations, once an investor seeks to increase its stake beyond the 30% threshold, it must make a mandatory offer to purchase the remaining shares from other investors. Frasers launched its bid at €38 per share in an effort to comply with those rules while expanding its influence over the German fashion company.
Despite the announcement, Hugo Boss shares traded just below the offer price, indicating that investors remain uncertain whether Frasers will improve its bid. The stock had briefly surged after the takeover proposal was first revealed in June but remains nearly 50% below the highs reached in July 2023.
Market analysts believe the offer was designed more to satisfy regulatory requirements than to secure immediate control of Hugo Boss. Analysts at investment bank Citi said the bid appears to be a mechanical extension of Frasers’ strategy of gradually building its ownership position rather than a reflection of the company’s actual worth.
Felix Jonathan Dennl, an analyst at Frankfurt-based Metzler, described the proposal as highly tactical and said it was always likely to face strong resistance from Hugo Boss management. He noted that the company’s board has received support from independent financial advisers, both of whom concluded that the offer does not provide fair value for shareholders.
The takeover battle comes at a challenging time for Hugo Boss. Since taking over as CEO five years ago, Daniel Grieder has worked to transform the company into one of the world’s leading premium fashion brands. His strategy focused on expanding internationally, modernizing the brand, and increasing sales across multiple product categories.
However, those ambitions have been tested by weaker consumer spending following the pandemic, rising inflation, and slowing demand in key markets such as the United Kingdom and China. Last year, Hugo Boss reported a 1% decline in sales and failed to achieve its earlier target of returning operating margins to pre-pandemic levels by 2025.
In response to these challenges, the company unveiled a new long-term business plan known as “Claim 5 Touchdown,” which runs through 2028. The strategy aims to improve operational efficiency across its retail network, accelerate growth in footwear and accessories, strengthen its womenswear business, and enhance profitability while adapting to changing consumer preferences.
The new plan has become central to Hugo Boss’ defense against the takeover attempt. Company executives argue that shareholders should allow management time to execute the strategy, believing it will generate significantly greater returns than those offered under Frasers’ current proposal.
Analysts also noted that the relatively low premium attached to the bid gives Frasers flexibility to continue increasing its stake in the future without immediately committing to a substantially higher acquisition price. While Hugo Boss has successfully resisted the initial offer, many believe the pressure is now on management to deliver stronger financial performance and prove that its transformation strategy can restore sustainable revenue and profit growth.
For now, Hugo Boss remains determined to remain independent, insisting that its future growth plans, global brand strength, and improving business strategy make the company worth considerably more than Frasers’ current €38-per-share offer. The outcome of the takeover battle will likely depend on whether shareholders believe in the company’s long-term vision or choose the certainty of an immediate cash payment.
Source Reuters
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