Accent Group, the struggling footwear and clothing retailer behind Hype DC, Platypus, Lacoste and other brands, has received a negative takeover bid from British retailer Frasers Group after frustrations over poor management and poor governance reached the final stage.
Frasers, which is Accent’s main investor with a 22.9 percent stake, told shareholders they were so dissatisfied with the company’s performance and strategy under chairman Lawrence Myers and CEO Daniel Agostinelli’s team that it was offering 65¢ per share, or $315.8 million, to buy the remaining 485.8 million shares it still does not own in the group.
Accent shares rose on the news, trading 11.5 per cent higher at 72.50¢ before 1pm AEST.
“Frasers believes that Mr Myers has failed to provide the necessary leadership to effectively guide Accent through its recent period of poor financial performance, and he should resign,” the British bidder said in documents filed with the ASX, citing among other issues Accent’s approach to capital management and executive remuneration, and ASIC’s investigation into possible insider trading by senior executives including Agostinelli.
“Frasers has made repeated attempts to engage with Mr Myers and the Accent board regarding a number of the above issues and has received no meaningful response,” it said.
Accent operates approximately 900 stores across Australia and New Zealand and has exclusive distribution rights to sell brands such as Vans, Hoka, Henleys, Dr Martens, Nude Lucy and more. However, the company’s share price has decreased by 48 percent in the last 12 months.
A number of issues have attracted the British bidder, which is mostly owned by British retail billionaire Mike Ashley. Late last year, Accent’s board received a strong vote against executive pay at its annual general meeting. In February, the company increased its first-half dividend to its shareholders while issuing a profit warning.
The Australian Securities and Investments Commission, the corporate watchdog, is conducting an investigation into possible insider trading by Agostinelli and other executives. Disclosing the ASIC investigation last month, Accent’s board said the sale of the CEO’s shares on the market had been pre-approved by its former chairman, that no charges had been laid and that Agostinelli “is fully supported by the board in his continuing role as CEO.”
Then, to top it all off Frasers, at an investor day held in mid-May failed to attract investors.
“We are strong believers in the strength of the brands sold through the Accent retail network, but the company has failed to demonstrate that it can deliver the results these brands deserve,” Frasers chief financial officer Christopher Wootton said in a statement.
The British company “now feels it is necessary to increase its ownership of Accent in order to achieve greater influence over Accent’s strategic direction in order to protect its investment.”
This title does not suggest the claims made by Frasers are valid, it merely reports that they have been made.
Although Frasers is offering to take full ownership of Accent, it said it would settle for a stake of at least 26 percent, which would allow it to install a second person on the board to join British businessman Dave Forsey, who led Sports Direct for 15 years, Frasers’ flagship retail brand.
Frasers has lost confidence in Accent management’s vision and ability to execute growth plans, its filings said. Accent had aimed to open at least 50 stores in the next six years, but recent investor day filings revealed these plans were revised down to 30 stores within three years, with the target of 50 stores “postponed indefinitely”.
“Frasers continues to believe in the sports retail market in Australia as a great growth opportunity and is committed to the significant work required over the next five years or so to turn around Accent’s business,” said Wootton.
Accent’s board asked shareholders to hold their shares and do nothing until they received its proposed bid in a target statement, saying that the price offered was only the closing price of the stock as of Friday, with no premium paid, and Frasers had paid an average of 90¢ a share when it raised its stake in early February, “which is above the offer price.”
The offer period will start today and close on June 30 at 4 pm.
The British retailer launched a similar bid for Hugo Boss last week. Frasers, which owns a 26 percent stake in Hugo Boss, offered to pay €1.98 billion ($3.3 billion) to buy the German fashion group.
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Jessica Yun is a business reporter covering retail and food for The Sydney Morning Herald and The Age.Connect through X or email address.
