British billionaire Mike Ashley's Frasers takes control of Hugo Boss with 50% stake

Frasers Group, the British retailer controlled by billionaire Mike Ashley, has taken control of Hugo Boss AG after lifting its stake in the German fashion house above 50%, six years after it first bought into the company.

Frasers said late on Friday that it bought 198,666 Hugo Boss shares for about €7.63 million ($8.55 million), paid from its existing cash. The purchase, at about €38.41 a share, raised its holding to 50.08% of the company's share capital. Hugo Boss will now be treated as a Frasers subsidiary, and its earnings, assets and liabilities will be consolidated into the retailer's accounts.

Frasers also holds sold put options on up to 15.5 million more Hugo Boss shares, or as much as 21.87% of the company. Those contracts could add to its holding if they are exercised.

A Hugo Boss spokesperson said crossing the 50% threshold would not have any major implications for the company. Under German company law, day-to-day management stays with Hugo Boss's management board, which is overseen by a supervisory board.

Hugo Boss shares fell 0.8% to €38.41 in Frankfurt on Friday, valuing the Metzingen-based company at about €2.7 billion ($3 billion). Frasers rose 0.3% to 877 pence in London.

A bid the board rejected

Frasers cut its Hugo Boss position in 2023 and rebuilt it from 2024, and held 26.06% when it announced a takeover offer in June at €38 a share in cash, valuing the shares it did not own at about €2 billion ($2.2 billion).

Hugo Boss's management and supervisory boards called the offer "inadequate from a financial point of view" and told shareholders to reject it. Frasers said the price was final and would not be raised. When the offer closed on Aug. 13, investors had tendered about 12.2 million shares, or 17.62% of the company, leaving Frasers with 47.89%, short of a majority.

Because Frasers crossed the 30% control threshold under German takeover rules during that public offer, it has since been free to buy more shares on the market without launching a new bid. A regulatory filing on Oct. 19 showed its direct stake had risen to 48.8%, and Friday's purchase pushed it over the line.

Frasers tightens its grip

Frasers has already reshaped the top of the company. In September, Frasers chief executive Michael Murray, who is Ashley's son-in-law, replaced Stephan Sturm as chairman of the Hugo Boss supervisory board. Yves Müller, Hugo Boss's chief financial and operating officer, stepped down at his own request soon after, and Ivica Maric took over his duties on Oct. 1.

Hugo Boss's profit fell 51% to €18 million ($20 million) in the first three months of the year. As of June 30, the company had gross assets of €3.53 billion ($3.96 billion) and net assets of €1.63 billion ($1.83 billion).

Ashley, 62, founded the business that became Frasers in 1982 with a single sports shop in Maidenhead, England, and built it into Sports Direct, which now sits alongside the House of Fraser and Flannels chains in a group of about 1,500 stores. He stepped down as chief executive in 2022 but remains the controlling shareholder, and he is worth about $4 billion.

Frasers has built stakes in several other consumer brands. It owns shares in online retailer Asos and disclosed an 8.78% stake in Under Armour this month, while Ashley holds a 5.77% stake in Puma in his own name. Frasers bought London department store Harvey Nichols in August.