Accent Group, the embattled footwear and clothing retailer behind Hype DC, Platypus, Lacoste and other brands, has received a hostile takeover bid from UK retail giant Frasers Group after frustration about mismanagement and poor governance reached a tipping point.
Frasers, which is Accent’s biggest investor with a 22.9 per cent stake, told shareholders it was so dissatisfied with the performance and strategy of the company under chairman Lawrence Myers and CEO Daniel Agostinelli’s team that it was offering 65¢ per share, or $315.8 million, to buy the remaining 485.8 million shares in the group it doesn’t yet own.
Accent’s shares soared on the news, trading 11.5 per cent higher at 72.50¢ just before 1pm AEST.
“Frasers believes that Mr Myers has failed to provide the leadership necessary to steer Accent effectively through its recent period of poor financial performance, and should step down,” the UK bidder said in documents filed with the ASX, citing among other concerns Accent’s approach to capital management and executive pay, and an ASIC investigation into potential insider trading by top executives including Agostinelli.
“Frasers has made repeated attempts to engage constructively with Mr Myers and the Accent board in relation to a number of the above matters and has received no meaningful response,” it said.
Accent operates nearly 900 stores across Australia and New Zealand and has the exclusive distribution rights to sell brands like Vans, Hoka, Henleys, Dr Martens, Nude Lucy and more. However, the company’s share price has declined by 48 per cent over the past 12 months.
Several issues have caught the attention of the British bidder, which is predominantly owned by UK retail billionaire Mike Ashley. Late last year, Accent’s board received a massive protest vote against executive pay at its annual general meeting. In February, the company increased first-half dividends for its shareholders while issuing a profit warning.
The Australian Securities and Investments Commission, the corporate watchdog, is conducting an investigation into potential insider trading by Agostinelli and other executives. Disclosing the ASIC probe last month, Accent’s board said the CEO’s on-market share sales had been pre-approved by its former chair, that no charges had been laid and that Agostinelli “has the full support of the board in his ongoing role as CEO.”
Then, to top it all off for Frasers, in investor day held in mid-May failed to impress investors.
“We are a great believer in the strength of the brands sold through Accent’s retail network, but the company has failed to demonstrate that it can deliver the outcomes that these brands are entitled to,” said Frasers chief financial officer Christopher Wootton in a statement.
The UK company “now feels it is necessary to increase its ownership of Accent to achieve greater influence over Accent’s strategic direction in order to protect its investment.”
This masthead isn’t suggesting the claims made by Frasers are valid, it’s merely reporting that they have been made.
Although Frasers is offering to take full ownership of Accent, it said it would be satisfied with a stake of at least 26 per cent, which would let it install a second person to the board to join British businessman Dave Forsey, who led Sports Direct for 15 years, Frasers’ best-known retail brand.
Frasers has lost confidence in Accent management’s vision and ability to roll out growth plans, its documents stated. Accent had aimed to open at least 50 stores in the next six years, but the recent investor day documents revealed these plans were revised down to 30 stores within three years, with the target of 50 stores “deferred to an undefined time frame”.
“Frasers continues to believe in the sports retail market in Australia as a positive opportunity for growth and is committed to doing the significant work required over the next five years or more to turn Accent’s business around,” said Wootton.
Accent’s board urged shareholders to hold on to their shares and do nothing until they received its recommendations for the bid in a target statement, pointing out that the price offered was just the stock’s closing price from Friday, with no premium offered, and Frasers had paid an average of 90¢ a share when it raised its stake in early February, “which is materially above the offer price.”
The offer period will begin today and close on June 30 at 4pm.
The UK retailer launched a similar bid for Hugo Boss last week. Frasers, which owns a 26 per cent stake in Hugo Boss, offered to pay €1.98 billion ($3.3 billion) to buy the rest of the German fashion group.
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Jessica Yun is a business reporter covering retail and food for The Sydney Morning Herald and The Age.Connect via X or email.
