Frasers Group increases stake in Hugo Boss

LONDON - Frasers Group PLC has announced a significant expansion of its investment in German fashion company Hugo Boss (ETR:BOSSn) AG. The UK-based retail giant has raised its stake in Hugo Boss to 19.2% by acquiring 13,548,661 shares of common stock. In addition, Frasers Group has engaged in the sale of put options that could potentially increase its share to 23.7% if the options are exercised in full.

The financial commitment of Frasers Group to this strategic investment is substantial, with the total exposure amounting to approximately €1,020 million (around £850 million) for a potential total interest in 30,248,661 Hugo Boss shares. The transaction is noteworthy as it does not require shareholder approval under UK Listing Rules, despite being a significant transaction for the company.

Frasers Group’s investment strategy involves developing partnerships and fostering relationships with key retailers and brands. The company has expressed confidence that this augmented investment in Hugo Boss will generate value for its shareholders, as previous investments have done.

Michael Murray, Chief Executive of Frasers Group, has been nominated for election to the Supervisory Board of Hugo Boss, with the election scheduled for May 2025. This move underscores the long-term commitment of Frasers Group to Hugo Boss and its strategic interest in the luxury fashion brand.

The put options sold by Frasers Group, with expiration dates in June 2027, could result in an additional payment of up to €65 million (approximately £55 million) for an interest in 2,200,000 Hugo Boss shares. These options follow a series of prior transactions involving Hugo Boss interests by Frasers Group over the past year, which could lead to a further payment of up to €470 million (around £390 million) for an interest in 14,500,000 shares if all options are exercised.

Hugo Boss, headquartered in Metzingen, Germany, is a leading global fashion and lifestyle brand known for high-quality men’s and women’s apparel. With earnings before taxes of approximately €301.5 million and gross assets of around €3.7 billion as of the end of 2024, Hugo Boss represents a significant investment opportunity for Frasers Group.

The additional investment in Hugo Boss will be financed using Frasers Group’s existing cash resources. The impact on the company’s earnings for the year ending April 27, 2025, particularly related to equity derivatives, will include accounting for any premium received and fair value gains as investment income, with any losses accounted for as investment costs.

This strategic move by Frasers Group is based on a press release statement and reflects the company’s ongoing focus on expanding its portfolio through strategic investments.

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