Agenda-setting intelligence, analysis and advice for the global fashion community.
Billionaire Mike Ashley’s Frasers Group Plc has taken a position in British luxury brand Burberry Group Plc, in another bet on the performance of a rival retailer.
The company behind Sports Direct, Flannels and House of Fraser disclosed Tuesday it holds an interest worth a potential 4.2 percent of the voting rights in Burberry. The position was acquired through the sale of put options, which if exercised would propel Frasers into the trenchcoat maker’s top 10 largest investors.
Frasers has a reputation for building up positions in retailers across Europe and then seeking change. It is the second-largest shareholder in Mulberry Group Plc, another British luxury brand, and previously attempted a takeover of the handbag maker. It is also the largest investor in Hugo Boss AG, where it pushed for change before launching a takeover offer.
Shares of Burberry rose as much as 6.6 percent on the news, before closing 5 percent higher in London. They are down 10 percent this year.
ADVERTISEMENT
Frasers has never explained in detail why it invests in competitors, or takes an activist position in some but not all. In the past, analysts have said it’s part of an “elevation strategy” to cement relationships with suppliers by becoming an investor in their businesses. Burberry products are sold in Frasers’ upmarket Flannels stores and website.
Not all of its investments are successful, with the group losing at least £150 million ($200 million) investing in the UK department store Debenhams.
Frasers was founded by Ashley, who controls more than two-thirds of the company, but is run by his son-in-law Michael Murray. Frasers declined to comment on its plans for Burberry, which also declined to comment.
By Deirdre Hipwell
Learn more:
Mike Ashley’s Frasers Boosts Hugo Boss Stake to Over 30%
After crossing the 30 percent ownership threshold, Frasers is now required to make a mandatory takeover bid under German rules.
