Frasers Group Takes Control of Hugo Boss After Lifting Its Stake to 50.08%

Frasers Group now controls Hugo Boss. The British retailer behind Sports Direct and Flannels said in a stock market filing on Friday evening that it bought 198,666 Hugo Boss shares on October 23 for €7,630,761, paid from cash it already had, which takes it to 50.08% of the German company's share capital. Hugo Boss becomes a Frasers subsidiary, and its earnings, assets and liabilities are expected to be consolidated into Frasers' accounts. WWD and FashionUnited both reported the filing.

The purchase was small; the line it crossed wasn't. Frasers' board said going past 50% was in the best interests of the company and its shareholders, and under UK listing rules the purchase needed no shareholder vote. The filing put Hugo Boss's gross assets at €3.5 billion and net assets at €1.6 billion at the end of June, and its first-half revenue at €1.8 billion, with EBITDA of €272.0 million.

How it got here

This has been building since the summer. In June Frasers offered €38 a share for Hugo Boss, and the company's management and supervisory boards rejected it as inadequate, FashionUnited reported. The offer still lifted Frasers' stake to 47.89% by August, and a filing on October 19 put it at 48.8%. In September Frasers said it wanted more shares, with the aim of full control, according to WWD. Its people were already in the room: Frasers chief executive Michael Murray replaced Stephan Sturm as chairman of the supervisory board in September, Frasers' company secretary Robert Palmer was named to that board, and Ivica Maric took over as finance and operations chief on October 1.

HUGO BOSS

FashionUnited estimates, from the filings, that Frasers has spent about €1.2 billion in all to reach a majority, starting with a 5% stake in 2020. Hugo Boss ended its share buyback early along the way.

What it means

Our read: this is a different kind of holding from the rest of Frasers' brand stakes. In Burberry, Puma and Asos it is a shareholder, and in Mulberry, where its takeover attempt failed, the second-largest one. In Hugo Boss it now has the majority, and Boss's results become part of Frasers' own. It also changes the shape of Frasers Group Luxury, the division Frasers unveiled this month around Flannels, Harvey Nichols and The Webster, which listed Hugo Boss among its strategic investments: one of those investments is now a subsidiary.

There may be more to come. The same filing says Frasers has sold put options over up to 15,050,100 more Hugo Boss shares, 21.87% of the company, which it would pay up to about €501.1 million for if every option were exercised. What hasn't been said is what Frasers does with control. Neither the filing nor the reports say whether it will make another offer for the remaining shares, change Hugo Boss's management board or move more BOSS and HUGO stock through Sports Direct, Flannels and Frasers stores, and Hugo Boss's own newsroom carried no statement on the filing when we checked.