Frasers Group launches bid to acquire all of Norway's XXL

(Alliance News) - Frasers Group PLC on Friday said it has made a move to buy all of XXL ASA, in a ...

Alliance News 6 December, 2024 | 11:25AM
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(Alliance News) - Frasers Group PLC on Friday said it has made a move to buy all of XXL ASA, in a tilt that values the Norwegian sportswear retailer at around GBP17 million.

The Shirebrook, England-based owner of multiple retailers, including House of Fraser, Sports Direct and Flannels, is already the second-largest shareholder in XXL, owning around 26% of share capital in the Oslo, Norway-based firm.

Frasers Group's voluntary offer is to purchase the remaining shares for NOK10 each. The proposal values XXL at approximately NOK246.4 million, some GBP17.4 million, and represents a 25% uplift from its closing price on Thursday, the group said.

It comes in response to a contentious "alternative rights issue plan" adopted by XXL in November, after shareholders voted against XXL's original issue plan to raise around NOK600 million.

"We believe that the proposed alternative rights issue is wrong", Frasers said on Friday. "Its legality is questionable and its implementation will be extremely detrimental to both Frasers and the other minority holders of XXL shares."

Frasers suggested XXL's original and alternative plans were both vulnerable to share dilution. In comparison, the voluntary offer would enable stockholders to monetise their shares rather than continue funding XXL on a diluted basis. According to Frasers, XXL "has not articulated any clear plan to address and resolve the root causes of its persistent problems".

"It is well reported that XXL is suffering from an inability to access adequate levels of appropriate stock, in turn damaging sales volumes and therefore its business," Frasers added.

"As we understand XXL is short of sufficient funds to pay its suppliers, Frasers has a solution for this cash shortage which also helps with the stock shortage. Subject to satisfactory due diligence and completion of the offer, Frasers is willing to consign up to NOK500 million of stock on a delayed payment basis whereby XXL will not be required to repay Frasers until the stock is sold."

Frasers Group shares were down 2.0% at 648.50 pence each on Friday morning in London.

Frasers cut its annual outlook on Thursday. Chief Executive Michael Murray said it has been "another period of progress" and the group is set to deliver "another year of profitable growth."

But he said "weaker consumer confidence leading up to and following the budget", means full-year adjusted pretax profit is now forecast in the range of GBP550 million to GBP600 million.

The company had previously expected an outcome between GBP575 million and GBP625 million. Adjusted pretax profit in financial 2024 totalled GBP544.8 million.

In the recent half-year to October 27, it declined 1.5% to GBP299.2 million.

By Holly Munks, Alliance News reporter

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Frasers Group PLC 626.50 GBX 2.79 -

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