Frasers Group is preparing to bid for Norwegian sports retailer XXL Sport & Villmark to expand its international footprint.
- Currently holding a 25.8% stake, Frasers Group aims to acquire the remaining shares at 10 kroner each, valuing XXL at approximately £17.45 million.
- XXL has been encountering profitability issues, partly due to stock shortages, prompting Frasers to offer support.
- The proposed offer includes co-signing up to £35 million of stock for XXL on a delayed payment basis.
- Frasers Group CEO Michael Murray expresses confidence in addressing XXL’s current financial challenges.
Frasers Group is set to take a strategic step in expanding its global reach by preparing a takeover bid for Norwegian sports retailer XXL Sport & Villmark. The company, which already holds a significant 25.8% share, intends to purchase the remaining stock at a price of 10 kroner per share. This valuation places XXL at approximately £17.45 million.
XXL has been grappling with profitability difficulties, largely due to stock availability problems. To address these challenges, Frasers Group has proposed a support mechanism to alleviate the retailer’s stock shortages. This includes an offer to co-sign up to £35 million of stock on a delayed payment basis, allowing XXL more flexibility in managing its financial obligations.
The sports retailer currently operates 85 stores across Norway, Finland, and Sweden. Frasers’ acquisition plan, contingent on satisfactory due diligence, aims to enhance XXL’s retail offering with an infusion of products and brands. This strategic move is expected not only to ease XXL’s cash constraints but also to make its retail offerings more appealing to customers.
Michael Murray, the CEO of Frasers Group, is optimistic about steering XXL through its present challenges. He stated, “Our strategic vision and industry experience position us uniquely to help XXL navigate its current challenges. We are committed to ensuring that XXL reaches its full potential.”
Despite this acquisition effort, Frasers Group has faced its own set of challenges. The company recently adjusted its profit expectations for the year, reducing them by £25 million, citing difficult trading conditions. This follows a notable 8.4% decline in half-year sales within its retail sector, amounting to £2.45 billion. Pre-tax profits also experienced a drop of 33% to £207.2 million due to foreign exchange fluctuations and a significant drop in the Hugo Boss share price.
Frasers Group’s planned acquisition of XXL Sport & Villmark signifies a strategic move to address existing challenges and enhance its market position.
