- Frasers stake is a ‘conflict of interest’
- Board representation calls rejected
- Kamani has ‘no intention’ of making offer
Struggling online fashion group Boohoo (BOO:AIM) has accused Mike Ashley’s Frasers (FRAS) of using its stake in the Debenhams-to-Karen Millen owner and other retailers to promote its own ‘commercial self-interest’.
The defiant comments came as Boohoo hit back at Frasers’ demands for a bigger role in its strategic review, having recently shunned the latter’s request for retail magnate Ashley to be made chief executive and appointed internal hire Dan Finley as its new head honcho instead.
Boohoo’s bombed-out shares ticked up 2% to 31p following the fast-fashion group’s latest utterances, with investors excited by the potential for further twists and turns to come in this boardroom battle.
BOOHOO BITES BACK
In its latest statement (8 November), Boohoo called out Frasers’ investments in other retailers, notably its large shareholding in Boohoo’s fierce rival ASOS (ASC), as evidence of a conflict of interest.
Boohoo argued holdings in such competitors made it impossible for Frasers to act as an independent shareholder.
Frasers is a ‘trade competitor that is seemingly focused on its own commercial self-interest’, insisted Boohoo.
‘Many of Frasers’ brands compete with the group’s brands, including boohoo, PrettyLittleThing and Karen Millen. Debenhams is also a leading competitor of House of Fraser, and Frasers was the largest shareholder in Debenhams prior to it being acquired, as well as being a competing bidder when Boohoo acquired Debenhams in 2021’, continued the company.
FUNDAMENTALLY UNDERVALUED?
Having built a 27% stake in Boohoo, Sports Direct-owner Frasers has been vocal in its demands since the fast-fashion firm announced a strategic review.
In its latest statement, Boohoo insisted it was ‘only at the start of the process of determining what options maximise value for all shareholders and will maintain high standards of corporate governance as it undertakes this process. The board believes that Boohoo is fundamentally undervalued and that this process is the best way to serve all shareholders.’
Boohoo said it would provide more details of its core brands at the upcoming interim results.
In its open letter to Boohoo (6 November), Frasers demanded a ‘restriction on disposals without shareholder approval’, a nod to Ashley’s concerns that Boohoo’s co-founder and other major shareholder Mahmud Kamani might buy back Boohoo and its brands at a lower price.
Frasers also accused Boohoo of having an ‘utter disregard’ for shareholder views. The letter stated: ‘The directors have pushed Boohoo into a terrible refinancing, while refusing to engage properly with Frasers on it. They have then rushed out a CEO appointment to try to block the say of shareholders. This has to stop. What will they try next? Desperate people do desperate things.’
But Boohoo insisted Kamani had ‘no intention’ of making an offer for the business and clarified that Kamani’s interests were ‘entirely aligned with maximising value on behalf of all shareholders’.
The company also rejected Frasers’ calls for board representation, saying it would only offer a seat to an ‘appropriate’ non-executive director and impose strict governance controls to ensure the company’s commercial interests are protected.
