Mike Ashley said to be mulling taking Frasers Group private

By

Sandra Halliday

Published
Dec 20, 2021

There’s speculation this week that Frasers Group’s majority shareholder Mike Ashley is planning to take the group private after nearly 15 years as a listed company.

The business — which was formerly known as Sports Direct — will see Michael Murray taking over from his future father-in-law Ashley as its CEO next year, but the latter retains control of the firm with a 68% stake.

The Telegraph reported on Monday that “strong trading has prompted rising speculation that Ashley could be plotting a move to take the company private”.

Although the firm’s share price is down slightly in recent days, its general trajectory has been upwards of late. Over a month, it’s up more than 3%, in six months it’s up 25%, and this year as a whole it has risen 63%+.

That rise has come as the attention has shifted away from the Sports Direct chain on which the group was founded (and that’s still its biggest revenue generator) and towards its premium retail unit. This unit includes the upscale Flannels retail chain that has been opening giant regional flagships across the UK and moving into the beauty arena.

The company, which also owns House of Fraser and Jack Wills, among others (as well as holding sizeable stakes in Hugo Boss and Mulberry), wants its premium unit to be a £2 billion business within five years.

But while Ashley is know for snapping up businesses when they’re cheap, improving results at Frasers and that rising share price, mean he might have to pay a premium to take the group private.

And of course, we have to take into account that rumours frequently swirl around Mike Ashley's head. In the last year alone, there has been talk that he was planning bids for both Mulberry and Hugo Boss. The company denied it was planning to buy the latter only this spring.

As for Frasers, it’s on track to report record profit of up to £350 million this year, a figure it hasn’t come close to since reporting underlying profits of £300 million in 2015.

Analysts pointed out that the company still faces challenges and has had to deal with hefty one-off costs against property in the last two years. 

But a City source told the newspaper that a deal to take the firm private may not be that far off after a recent £70 million share buyback was launched. Given that Ashley owns nearly 70% of the firm and that private ownership is more likely once a 75% threshold is reached, the buyback couple be hugely significant.

Yet the current elevated share price means some analysts think a privatisation is unlikely. One suggested the time to take it private was when the shares were less than half the price they are now.

For now, Frasers is saying nothing.