Frasers Group sells 25% French Connection stake

By

Sandra Halliday

Published
Feb 8, 2021

Frasers Group took advantage of a rising share price last week to sell its entire stake in struggling French Connection. The company had a stake adding up to a 24.93% holding in the firm prior to the sale.

It sold that holding on Thursday, the day before French Connection announced that it had received approaches from two potential suitors.

The share price had risen around 50% from 11.1p a share to 15.65p on Thursday. Had Frasers waited until Friday, it would have seen the shares reaching 25.7p each, while on Monday they continued their climb to hit 30p in morning trading.

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But anyone buying today runs the risk that bid talks could fail and the share price could plummet as fast as (or faster than) it has risen in recent days.

Regardless of what happens to the share price, Frasers won't be involved. Its exit brings to an end a steady building up of shares in French Connection made over an extended period of time. The group, which is run by retail tycoon Mike Ashley, has been a serial buyer of shares in distressed companies, as well as buying other businesses outright.

It's share-buying strategy backfired on it badly with Debenhams when the company was estimated to have spent more than £100 million on building up a roughly 30% stake in the retailer. This was wiped out when the stock exchange-listed business went into administration.

It also missed out on buying the business back, which reports before Christmas suggested it was keen to do, with Boohoo eventually taking over the Debenhams name. 

Frasers retains substantial stakes in other high-profile businesses, including luxury leather goods specialist Mulberry and German upscale fashion giant Hugo Boss, both of which are important to its higher-end multibrand retail operations.