Hugo Boss shares jump above offer price after Frasers’ bid

By Ozan Ergenay and Danilo Masoni

June 11 (Reuters) – Shares in Hugo Boss rose more than 11% on Thursday after its largest shareholder, Frasers Group, launched a $2.3 billion takeover bid for the German fashion brand.

The British company is offering €38 per share in cash for the nearly 74% of Hugo Boss it does not already own, a 4.3% premium to Wednesday’s close. The shares rose past that level, fuelled by speculation of a higher offer and suggesting investors see the bid as undervaluing the business.

Hugo Boss said the approach was not coordinated with the company and that its board would review the offer, which values the outstanding stake at about €2 billion ($2.3 billion).

The deal would bring Hugo Boss into the retail empire controlled by British billionaire Mike Ashley, whose Frasers Group owns Sports Direct and House of Fraser and holds stakes in Asos, Debenhams and Currys.

JP Morgan said the bid likely sets a near-term floor for the shares but flagged limited scope for further upside, adding it did not expect a rival bidder to emerge.

Analysts at Oddo BHF described Frasers’ approach as a likely “low ball” move, arguing Hugo Boss’s current valuation looks depressed relative to historical levels.

“Based on all that, we would guess that not many investors will accept the offer,” they said.

Hugo Boss, whose shares are about half their level of three years ago, has been struggling with weaker sales and is pursuing a turnaround strategy focused on store revamps, a streamlined product range and expanding women’s wear.

By 1412 GMT, Hugo Boss shares traded as high as €40.5, or €2.5 above the offer price, taking their year-to-date gains to 12%. Frasers’ shares rose 2.8%, reversing earlier losses.

($1 = 0.8664 euros)

(Reporting by Ozan Ergenay and Danilo Masoni, editing by Milla Nissi-Prussak and Susan Fenton)