French Connection confirms it's in talks about a sale
today Oct 21, 2018
French Connection said on Friday it has started talks with four parties regarding a sale. The company, which had announced not long before that it was reviewing its strategic options, also said it has had talks with other interested parties about its plans, which could mean it’s not guaranteed that it will eventually agree to a sale. We don't know who it's talking to either.
French Connection was founded by its CEO and Chairman Stephen Marks in 1972, who is its biggest shareholder, but Sport Direct is its second biggest shareholder with close to a 30% stake and it's unclear whether Sports Direct boss Mike Ashley would want to try to take it over completely to add to his growing empire.
Why is it for sale? Having ridden a wave of high sales on the back of its provocative FCUK brand some years ago, the company’s offer began to look stale this decade and it has been loss-making for six years with plenty of shareholder complaints about its strategy during that time. But in March, it said it was on the verge of turning profitable after having closed a number of stores, including its giant Regent Street flagship.
If it's sold, it might not happen that quickly. The firm said it expects its strategic review to conclude in the first half of 2019.
Any buyer shouldn’t expect to get it cheaply either. The company’s share price surged 45% on October 8 after it emerged that a sale was a possibility after having been low for some time.
The company owns its namesake brand, as well as Great Plains and YMC, but sold its Toast operation to Bestseller this spring. It has struggled in recent years as high street rivals such as Zara showed they were able to offer on-trend pieces more quickly and at more affordable prices.
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