Boohoo hits back, accuses Frasers of promoting own 'self-interest'
By Michele Maatouk
Date: Thursday 07 Nov 2024
(Sharecast News) - Boohoo hit back at Frasers Group on Thursday, accusing the retail company of promoting its own "self-interest" at the expense of other shareholders.
In an open letter to Boohoo published on Wednesday, Frasers urged the company's board not to dispose of any assets without prior shareholder approval.
The company said that "in light of the board's refusal to allow shareholders to vote on key decisions affecting Boohoo, such as the CEO appointment", it has been left "with no choice" but to ask the board to publicly confirm that Boohoo will not make any disposals without getting shareholder approval first.
Frasers also argued that Boohoo should get confirmation from an independent adviser/investment bank that the terms are "fair and reasonable, the disposal has been conducted at arm's length and the disposal is in the best interests of Boohoo's shareholders".
These measures are necessary "to protect the interests of Boohoo, its shareholders and its stakeholders", Frasers said.
The letter came after Boohoo announced last that week that it had appointed Dan Finley - the current boss of Debenhams - as its new chief executive, in an apparent snub to Frasers' request for it to appoint Mike Ashley.
In an earlier letter to Boohoo on 24 October, Frasers also criticised the online fashion retailer's recent £222m debt refinancing, calling it "wholly unsatisfactory" and saying it had been agreed on unfavourable terms.
But in its response on Thursday, Boohoo said it plans to provide more details to shareholders of its core brands in its interim results.
"The board expects that the ongoing review of options will take several months, and the Board will update shareholders with full transparency at the appropriate times," it said. "The board remains committed to open and transparent engagement with all of its shareholders, including Frasers and that it is fully aware of, and is continuing to act in accordance with, its duties.
"The board is also committed to ensuring it takes the right steps to drive the group in the interest of all shareholders and not just Frasers' self-interest."
Boohoo went on to point out that Frasers is not an independent shareholder in the group, focused solely on the value of its investment.
"It is a trade competitor that is seemingly focused on its own commercial self-interest," it said.
Boohoo noted that many of Frasers' brands compete with its own brands, including Boohoo, PrettyLittleThing and Karen Millen.
"Debenhams is also a leading competitor of House of Fraser, and Frasers was the largest shareholder in Debenhams prior to it being acquired, as well as being a competing bidder when boohoo acquired Debenhams in 2021," it said.
In addition, Boohoo made the point that Frasers has a large interest in Asos, which also competes with its brands.
"Frasers also has a well-publicised history of making significant investments in other UK retailers which also compete with Boohoo," it added.
"The board considers it wholly inappropriate for Frasers to seek to leverage its significant shareholding in boohoo and other UK retailers to promote its own commercial self-interest, such as Frasers PLUS, at the expense of the other shareholders and will take all steps necessary to protect its commercial position and shareholders best interests," it said.
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