ASOS shares are back in fashion amid US bid rumours - but boss could still offload stock to fund divorce
Shares of online fashion emporium ASOS, which has clothed Prime Minister’s wife Samantha Cameron and superstar singer Rihanna, were suddenly in vogue again as takeover rumours swept sparsely populated dealing rooms.
They jumped 166p or 7.6 per cent to 2,348p on vague talk of a US cash bid in the region of £50 a share.
Dealers heard whispers that its major 27.4 per cent shareholder Bestseller, the Danish privately-held family-owned clothing firm, has been approached for its stake by a US buyer.
Takeover rumours: eBay and Amazon are believed to be interested in buying ASOS
Interested buyers are believed to be eBay, the US multinational e-commerce group, and Amazon, despite yesterday announcing the completion of its £585million purchase of game streaming site Twitch. Both giants want to expand further into clothing.
The speculation comes at a time when the market still fears that ASOS’s founder and chief executive Nick Robertson could sell a shed-load more shares to fund one of Britain’s biggest ever divorce settlements.
It was announced in March that Robertson, one of the UK’s richest men, had split with his wife of 10 years, Janine, and it is now understood that divorce proceedings have begun.
Robertson could therefore be forced to hand over a large chunk of his £440million-plus fortune. Over the past four years Robertson has sold around £110million worth of stock at prices ranging from 890p to £50 a pop.
ASOS touched a high of 7,195p in March, valuing the AIM stock at an incredible £6billion, a level which would have catapulted it into the Footsie had it moved from the junior market to a full listing.
Many traders then had trouble justifying its lofty valuation and were adamant that the bubble would burst. It did. Two profit warnings in four months had investors scrambling to take profits.
The stock lost £1.2billion of its value in one traumatic trading day in June as the board warned that slowing global sales, increased discounting and a troubled foray into China would hit profits.
The operating margin would be 4.5 per cent rather than 6.5 per cent, it said, meaning that pre-tax profits will probably come in at around £45million this year rather than £65million.
Robertson still owns a 9.3 per cent stake in ASOS and apparently remains passionate about the business. But should a foreign bidder come along with an offer possibly more than double the current share price, he surely would now be tempted. It would certainly help him service a hefty alimony payment should it eventually materialise.
Lord Wolfson’s fashion retailer Next was also popular as reports suggest its Next Directory online business continues to trade its socks off.
Renewed demand lifted the shares 65p to a record 7120p and its market valuation to £10.9billion, almost £4billion more than Marks & Spencer, 6p dearer at 442.4p. That says it all.
There was nothing much else to write home about as the peak August holiday period took its toll on business. By late afternoon a paltry 280million shares had been traded on the LSE.
Nevertheless, the fabulous Footsie played catch-up after Monday’s break, taking its cue from a record-breaking Wall Street to close 47.51 points better at 6822.7. It now stands only 1.8 per cent below its all-time high of 6,950.60 recorded on 30th December 1999.
Several broking firms believe merger and acquisition activity in the fourth quarter will help it smash through the magic 7,000 barrier. Killik has pencilled in 7,400 by the end of the year.
The Street of Dreams traded at a record 17,153 in the early stages as buyers in New York responded further to Federal Reserve chairman Janet Yellen’s comments over the weekend indicating that US interest rates will remain low for the foreseeable future.
Relieved that flights over the frantic Bank Holiday weekend were not affected by any fresh seismic activity at the Bardarbunga volcano in Iceland, British Airways group International Consolidated Airlines advanced 12.1p to 358.1p and EasyJet rose 35p to 1354p.
Buying in anticipation of good interims on Friday helped digital sports media group Perform climb 16p to 211p. News of the surprise departure of Michael Tobin dragged Telecity 45.5p lower to 716p.
He has been chief executive for over 10 years since the group’s IPO and will leave the company following a period of handover at the end of October. The board will start an immediate search for a successor and, in the meantime, chairman John Hughes will assume executive duties.
Circle Oil gushed 5.12p or 29pc to 22.88p on hearing that its El Medioiuni well in Tunisia has made a potentially transformational oil discovery. Analysts said it could be worth more than 80p a share if management’s initial estimate of resources is confirmed.
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