Hugo Boss (TG:BOSS) has urged shareholders to reject the voluntary takeover offer from Frasers Group (LSE:FRAS), with both its management and supervisory boards stating that the British retailer’s €38-per-share proposal does not adequately reflect the company’s long-term value or future growth prospects.
Frasers Group, which owns Sports Direct and is Hugo Boss’s largest shareholder, announced the offer last month. However, the German fashion group said the bid significantly undervalues the business as it continues to execute its strategic plan through 2028.
“The offer does not reflect the standalone prospects and future value creation potential of Hugo Boss,” the company said. “On this basis, the Managing Board and Supervisory Board recommend that shareholders do not accept the offer.”
Hugo Boss shares were little changed in European trading by 08:18 GMT following the recommendation.
The company also noted that the €38 offer represents the minimum price permitted under German takeover regulations. The figure is based on the highest price Frasers Group paid for Hugo Boss shares during the six months preceding the offer and, according to the board, should not be viewed as an assessment of the company’s intrinsic value.
Shares in Hugo Boss surged when Frasers Group announced its proposal last month, valuing the fashion retailer at approximately $2.3 billion. At the time, Hugo Boss described the approach as uncoordinated and confirmed that its board would conduct a formal review. The offer values the company’s outstanding shares at around €2 billion.
Following the announcement, analysts at JPMorgan said the proposal was likely to provide a near-term floor for the share price but saw limited scope for a competing offer to emerge.
Hugo Boss shares remain well below the levels seen three years ago as the company continues to implement its turnaround strategy. Its “Claim 5 Touchdown” plan focuses on modernising stores, streamlining product ranges and expanding its womenswear business. Through the strategy, the company is targeting an EBIT margin of around 12% and average annual free cash flow of approximately €300 million by 2028, supported by stronger brand positioning, improved distribution and greater operational efficiency.
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