- Takeover rumours have been rife over the past six months
- ASOS half-year results in May ‘disappointing’
- £75 million capital raising might not be enough to save it
Shares in online retailer ASOS (ASC) were up more than 10% to 387p in morning trading lifted by rumours of a possible £1 billion bid from a Turkish online fast fashion firm Trendyol.
This news however is not new, and rumours of the troubled online retailer ASOS being taken over have been circulating since late December according to reports in The Times newspaper.
It is understood that Trendyol is ‘working with advisers from Morgan Stanley’.
Russ Mould, investment director at AJ Bell said: ‘Given that it has been six months since Turkey’s Trendyol reportedly made the approach, one can assume that talks are not ongoing, otherwise we would have heard something from ASOS by now.
‘However, some shareholders may be frustrated that ASOS didn’t publicly disclose the approach, assuming the reports are correct. With the shares having slumped to 350p last week, there may be a group of investors who would be eager to accept a bid potentially three times that level.
‘The weekend reports about the bid talks may force ASOS to issue a statement and one would have thought CEO Jose Antonio Ramos Calamonte’s phone won’t have stopped ringing since the weekend.’
MIXED REACTION FROM FAST FASHION SECTOR
Possible bid action for troubled ASOS was met with mixed reactions from other fast fashion retailers this morning: Bohoo (BOO:AIM) shares were up over 2% to 41p and Sosander (SOS) shares were up over 1% to 25p; others were down, Quiz (QUIZ) shares were off 2% to 11p, Zalando (ZAL) shares were off 1% to €26.
ASOS’s shares have been on a rollercoaster ride over the past six months, down nearly 40% and over the past year down 75% - not an easy ride for investors.
It is no wonder that the fast fashion firm is subject of takeover speculation.
Although ASOS reported ‘a significant improvement in profitability at the start of the year’ and ‘it has since raised £75 million to help fund its turnaround and strengthen its finances’, according to Mould ‘its half-year results in May were disappointing with losses widening and an ongoing struggle with day-to-day trading.’
Takeover interest in ASOS may signal possible takeovers in the fast fashion sector who are currently struggling in this tough macroeconomic environment.
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The editor of the article (Martin Gamble) owns shares in AJ Bell.
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