REG - Frasers Group PLC - Further strategic investment in Hugo Boss AG

FrasersAnnouncement

02/04/2025 18:00

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RNS Number : 4254D  Frasers Group PLC  02 April 2025

2 April 2025

 

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FRASERS GROUP PLC ("Frasers Group" or the "Company")

FURTHER STRATEGIC INVESTMENT IN HUGO BOSS AG ("Hugo Boss")

Frasers Group is pleased to announce that it has increased its investment in
Hugo Boss (the "HB Strategic Investment") through the further sale of put
options over Hugo Boss' shares (the "HB Trades").  Accordingly, Frasers Group
holds the following interests in the common stock of Hugo Boss ("Common
Stock"):

·    13,548,661 shares of Common Stock, representing 19.2% of Hugo Boss'
total share capital; and

·    up to 16,700,000 shares of Common Stock through the sale of put
options, representing up to 23.7% of Hugo Boss' total share capital.

After taking into account the premium received and strike prices under the put
options, Frasers Group's maximum aggregate exposure in connection with its net
acquired interests in Hugo Boss, at the closing share price on the date of
this announcement, is approximately €1,020 million (approx. £850 million)
for the interest in 30,248,661 shares in Hugo Boss that would result if the
put options were exercised in full.

Details of the HB Strategic Investment

Frasers Group makes strategic investments in the ordinary course of its
business to develop relationships and partnerships with other retailers and to
build relationships with key suppliers and brands.  The Company remains a
long-term investor in Hugo Boss and the board of directors of Frasers Group
(the "Board") believes that the HB Strategic Investment will create value for
the Company's shareholders, as its strategic investments in Hugo Boss have
done in the past.  Michael Murray, the Chief Executive of Frasers Group, has
been nominated for election to the Supervisory Board of Hugo Boss in May 2025.

Through the HB Trades, the Company has acquired additional interests in Hugo
Boss through the sale of put options which give the counterparty the right
(but not the obligation) to sell Common Stock to the Company at an agreed
price per share.  The Company has received a premium in respect of any such
put options sold.  The put options are sold on an exchange and the Company
does not know the identity of the counterparty to the put options.

The Company has sold these put options to one or more counterparties, with
expiry dates in June 2027, such that, after taking into account any premium
received by the Company, the net amount of consideration payable by the
Company if all these put options were exercised would be up to approximately
€65 million (approx. £55 million) for the interest in 2,200,000 shares in
Hugo Boss.

In the 12-month period ended on the date of this announcement, the Company
completed transactions involving interests in Hugo Boss, including but not
limited to acquisitions of Common Stock, options or other rights to acquire
interests in Common Stock, derivatives or other financial instruments the
price of which was referenced to, or provided economic exposure to, the Common
Stock (the "Prior Trades"). The Prior Trades have been entered into with one
or more counterparties and, in the case of any put options, with a range of
expiry dates up to and including December 2027. The net amount of
consideration payable by the Company if all put options under the Prior Trades
were exercised by the relevant counterparties would be up to approximately
€470 million (approx. £390 million) for the interest in 14,500,000 shares
in Hugo Boss if the outstanding options were exercised in full.

The HB Trades, when aggregated with the Prior Trades, constitute a significant
transaction for the purposes of the UK Listing Rules made by the Financial
Conduct Authority (the "UKLR") and are therefore notifiable in accordance with
UKLR 7.3.1R and 7.3.2R.  In accordance with the UKLR, the HB Trades (together
with the Prior Trades) are not subject to shareholder approval.

Information on Hugo Boss

Hugo Boss is a publicly traded company (Aktiengesellschaft) headquartered in
Metzingen, Baden-Württemberg, Germany with its Common Stock traded on the
Frankfurt Stock Exchange.  As described in its 2024 Annual Report, Hugo Boss
is a leading global fashion and lifestyle company, offering high-quality
women's and men's apparel.

As set out in Hugo Boss' financial statements for the year ended 31 December
2024, Hugo Boss had earnings before taxes of approximately €301.5 million
and gross assets of approximately €3.7 billion.

Financial effects of the HB Trades on the Group

The HB Trades, if exercised, will be financed from the existing cash resources
of the Company.

Following the HB Trades (if exercised), the assets of the Company and its
subsidiaries (the "Group") will comprise all existing assets of Frasers Group,
and the interests in Hugo Boss which are the subject of the HB Trades, less
the net cash cost of such HB Trades.  Regarding the impact of the HB
Strategic Investment on the Company's earnings in the year ending 27 April
2025, specifically relating to equity derivatives only, any premium received
and fair value gain will be accounted for as investment income, and any loss
on disposal and fair value loss will be accounted for as investment costs.

Further information relating to the HB Trades is set out in Appendix 1 to this
announcement.

Enquiries:

 Frasers Group plc                             T. 034 4245 9200

Robert Palmer, Company Secretary
E. company.secretary@frasers.group

LEI: 213800JEGHHEAXIJDX34
 Chris Wootton, Chief Financial Officer        T. 034 4245 9200

E. financial@frasers.group (mailto:financial@frasers.group)
 Andrew Kasoulis, Investor Relations Director  T. 078 2653 2191

E. andrew.kasoulis@frasers.group (mailto:andrew.kasoulis@frasers.group)
 Rosie Oddy, Brunswick Group, PR Advisors      T. 077 3486 1279

E. frasersgroup@brunswickgroup.com (mailto:frasersgroup@brunswickgroup.com)
 Kathleen Glover, Frasers Group PR             T. 078 7877 1800

E. fgpr@frasers.group

Appendix 1

Risks of the HB Strategic Investment on the Company

The trading price of the Common Stock may be volatile and influenced by
several factors, some specific to Hugo Boss and its operations, some which may
affect the luxury goods and retail sectors and some which may affect quoted
companies generally.  This means that the Company may be unable in the future
to dispose of any of its HB Strategic Investment at a price greater than or
equal to the current market price (or equivalent). There can be no guarantee
that the Company will receive a return on its investment.

Board's view on the HB Trades

The Board is in the opinion that entering into the HB Trades is in the best
interests of the Company and the Company's shareholders as a whole.

Material contracts

The Group

There have been no contracts entered into (other than contracts entered into
in the ordinary course of business) by the Company or any member of the Group
either: (i) within the two years immediately preceding publication of this
announcement which are, or may be, material to the Group; or (ii) which
contain any provisions under which any member of the Group has any obligation
or entitlement which is, or may be, material to the Group as at the date of
this announcement.

The Company's interest In Hugo Boss

No member of the Group has entered into any contracts (not being contracts
entered into in the ordinary course of business) either: (i) within the two
years immediately preceding publication of this announcement which are, or may
be, material to the Company's interest in Hugo Boss; or (ii) which contain any
provision under which any member of the Group has any obligation or
entitlement which is, or may be, material to the Company's interest in Hugo
Boss as at the date of this announcement.

Legal and arbitration proceedings

The Group

There are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which the Company is
aware) during the period covering the 12 months preceding the date of this
announcement which may have, or have had in the recent past, significant
effects on the financial position or profitability of the Company and / or the
Group.

The Company's interest in Hugo Boss

There are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which the Company is
aware) during the period covering the 12 months preceding the date of this
announcement which may have, or have had in the recent past, significant
effects on the financial position or profitability of the Company's interest
in Hugo Boss.

Significant change in the Group's financial position

There has been no significant change in the financial position of the Group
since 27 October 2024, being the end of the last financial period for which
interim financial information of the Group has been published.

 

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