French Connection attract new takeover offers ahead of deadline

Latest News | Mergers & Acquisitions | Retail | South East

Fashion retailer French Connection is today considering two separate takeover offers.

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The company has received approaches from retail investor Spotlight Brands, with backing from investment firm Gordon Brothers; and from digital investment platform Go Global Retail.

Both bids have until 5pm today to announce firm and formal interest in acquiring French Connection – although there are reports that the deadline could be extended until March to complete any deal.

French Connection said in a statement to investors: “Discussions with both Spotlight and Go Global remain at a very early stage. Accordingly, there can be no certainty that an offer will be made, nor as to the terms on which any offer might be made. Further announcements will be made as appropriate in due course.”

Industry reaction

John Colley, Associate Dean of Warwick Business School and an expert on mergers and acquisitions, said: “The interest in buying French Connection seems to have been timed to coincide with the bottom of the retail market. Stores are likely to start reopening in the next three months, which means that now is the time to buy as the process is likely to take some weeks.

“Certainly a successful offer now would minimise price and ensure shareholders stomach some of the costs of reorganisation. No doubt deals would have to be done with landlords in advance as high street rents will now be some way below historic levels and unlikely to recover. Competitors will certainly now have negotiated much lower rents. The surge in share prices suggests shareholders are being over optimistic as any sale will certainly involve them sharing in the reduced value.

“The good news is that this may save some jobs as the business is unlikely to go directly online only. The bad news is that there will be significant costs to a reorganisation.”

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