Boohoo Group has responded robustly to Frasers Group’s demands regarding its strategic review.
- Frasers seeks greater influence, citing concerns over brand disposals.
- Boohoo accuses Frasers of prioritising its own commercial interests.
- A public exchange has highlighted Frasers’ investments in competitor brands.
- Boohoo calls for governance safeguards and clarity from both parties.
Boohoo Group has issued a forceful response to the Frasers Group’s demands for increased influence in its strategic review. Frasers, which owns a significant 27% interest in Boohoo, has been vocal about its desire to have a stronger say in the strategic decisions of the company. These demands come as Boohoo conducts a review aimed at unlocking shareholder value, potentially through the sale of brands such as PrettyLittleThing and Warehouse.
Boohoo contends that Frasers, owned by Mike Ashley, is leveraging its investment to further its own commercial interests. The online fashion retailer points to Frasers’ stakes in rival companies like Asos and House of Fraser as evidence of conflicted interests. Boohoo asserts that this dual role as both investor and competitor makes it untenable for Frasers to act as an impartial shareholder. The conflict is emphasised by Boohoo’s statement: “Frasers is not just an investor in Boohoo; it is a trade competitor focused on its own commercial self-interest.”
Moreover, Frasers’ recent demands include adding restrictions on the disposal of Boohoo’s brands without shareholder approval. This move is driven by fears that Boohoo’s co-founder, Mahmud Kamani, might re-acquire these brands at a lower price. Kamani, who owns 23% of Boohoo shares, has formally rejected these claims, stating he has no intention to buy back the business. This declaration activates a six-month restriction under the City takeover code, reinforcing Boohoo’s stance that Kamani’s and shareholders’ interests are aligned toward maximising value.
Boohoo has also refused Frasers’ request for board representation unless stringent conditions are met. Boohoo demands that any Frasers appointee must not be involved in any competitor’s commercial decisions and should not disclose sensitive competitive information. Further, Boohoo seeks indemnity from Frasers in the event of any breaches of these stipulations. These stringent measures underscore Boohoo’s commitment to protecting its commercial interests from potential conflicts orchestrated by Frasers.
In a provocative move, Frasers has launched a website titled ‘Boohoo Deserves Better’, aiming to galvanise support from Boohoo’s shareholders against the current strategic approach. This digital campaign signifies an escalation in the conflict between the two retail giants, spotlighting the tension simmering beneath their shareholder relationship.
The ongoing conflict between Boohoo and Frasers underscores the complexities of balancing shareholder influence with business independence.
