UK retail giant Frasers launches hostile bid for Accent Group, demands chairman step down

The owner of Hype DC, Platypus, Athlete's Foot and Lacoste is under siege. UK retail giant Frasers Group has launched a hostile takeover bid for Accent Group, offering 65¢ per share — or $315.8 million — to buy the 485.8 million shares it doesn't already own.

Frasers, which already holds a 22.9 per cent stake, is fed up. It says chairman Lawrence Myers has failed to lead the company through its recent poor financial performance. It wants him gone. The UK company also pointed to an ASIC investigation into potential insider trading by CEO Daniel Agostinelli and other executives as a key concern.

"Frasers believes that Mr Myers has failed to provide the leadership necessary to steer Accent effectively through its recent period of poor financial performance, and should step down," the bidder said in documents filed with the ASX.

Accent's shares jumped 11.5 per cent to 72.50¢ on the news — above the offer price. That tells you the market thinks a higher bid might come, or that the current offer is too low.

The offer price is exactly what Accent shares closed at on Friday — no premium at all. Frasers itself paid an average of 90¢ a share when it increased its stake in February, which is well above the 65¢ it's now offering. Accent's board has told shareholders to sit tight and wait for the company's official response.

Frasers, controlled by UK billionaire Mike Ashley, has been trying to talk to Accent's board for a while. It says it got "no meaningful response" to its concerns. Those concerns include executive pay — Accent's board faced a massive protest vote on pay at its AGM late last year — and a decision to increase dividends while issuing a profit warning in February.

Then there's the ASIC investigation. The corporate watchdog is looking into potential insider trading by Agostinelli and other top executives. Accent disclosed the probe last month, saying the CEO's share sales had been pre-approved by the former chair, and that no charges have been laid. The board said it still fully supports Agostinelli.

To make matters worse, an investor day in mid-May failed to impress. Accent had planned to open 50 stores over the next six years. That target has now been cut to 30 stores in three years, with the rest "deferred to an undefined time frame."

"We are a great believer in the strength of the brands sold through Accent's retail network, but the company has failed to demonstrate that it can deliver the outcomes that these brands are entitled to," said Frasers CFO Christopher Wootton.

Accent runs nearly 900 stores across Australia and New Zealand. It has exclusive rights to sell Vans, Hoka, Dr Martens, Nude Lucy and other big brands. But its share price has dropped 48 per cent in the past year.

Frasers says it would be happy with a stake of at least 26 per cent — enough to put a second person on the board alongside Dave Forsey, who ran Sports Direct for 15 years. But it's going for full ownership. The offer period opens today and closes on June 30 at 4pm.

This isn't Frasers' only big move. Last week it launched a similar bid for Hugo Boss, offering €1.98 billion ($3.3 billion) for the rest of the German fashion group it doesn't already own.

"Frasers continues to believe in the sports retail market in Australia as a positive opportunity for growth and is committed to doing the significant work required over the next five years or more to turn Accent's business around," said Wootton.

For now, Accent's board is urging shareholders to do nothing until they see the target statement. But with the share price already above the offer, the ball is very much in Frasers' court.