ASOS sees bid approach as share price slumbers - report
ASOS is believed to have received a £1 billion takeover approach a few months ago from a Turkish company taking advantage of the potential in its giant market but also its falling share price.
While that approach was rebuffed, with it reportedly valuing ASOS between £10 and £12 a share and its current share price slumbering at £3.50, it remains at risk of further approaches and takeover attempts.
The approach in December came from Turkey’s Trendyol, a fast-growing e-tailer backed by Chinese giant Alibaba.
It hasn’t been officially disclosed as there are no live talks happening. Both ASOS and Trendyol declined to comment, The Times reported.
ASOS has been battling a tough fashion online retail market in recent years and also recently saw the withdrawal of some credit insurance, which will place big pressure on its cash flow as suppliers are more likely to require payment in advance.
It has also seen its share price falling for some time. In fact, the company has seen a 93% share price fall in the past two years.
Under CEO José Antonio Ramos Calamonte, it recently reinforced its finances by raising £75 million from investors via a share placing. It also entered new and expensive £275 million debt facilities with Bantry Bay, a specialist lender backed by the hedge fund Elliott Advisors.
The £75 million share-based capital raise was supported by Bestseller owner Anders Holch Povlsen, ASOS's biggest shareholder with a 26% stake.
The newspaper said Trendyol had approached Povlsen to see whether he would be interested in participating in a takeover. But his representative also isn't commenting.
Frasers Group’s Mike Ashley is also a major shareholder with 7.4% and Ashley and Holch Povlsen have clashed in the past, notably over the building for Jenners in Edinburgh. Holch Povlsen owns the building that housed one of Frasers’ department stores. It was forced to close and is now being converted into a hotel.
Now, The Telegraph has reported that Frasers is unhappy after being rebuffed when CEO Michael Murray suggested a further investment in ASOS giving it an extra 5% stake and “closer cooperation” to take advantage of Frasers’ retail expertise. It was pointed out that this wasn’t a takeover attempt.
But the ASOS decision to raise financing through other means and the cost and source of the financing reportedly came as an unpleasant surprise to Frasers.
With speculation remaining that Holch Povlsen might try to take ASOS private, Frasers still seeing the business as a worthwhile investment and some other institutional investors blindsided by the refinancing approach, there’s clearly still a lot of news to come.
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