French Connection confirms multiple takeover approaches
French Connection said on Friday that it has received more than one takeover approach. It’s considering a sale of the retailer, which has been struggling for several years and has seen its share price plummeting along with its sales and profits.
It said the early takeover approaches have come from Spotlight Brands in conjunction with Gordon Brothers International and Go Global Retail in partnership with HMJ International.
Of course, this doesn't mean that a concrete bid will actually happen and the company said that it's still in talks with its two suitors. “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 (although any offer is likely to be in cash). Further announcements will be made as appropriate in due course,” it said.
Under stock exchange rules, the possible bidders have until no later than the end of play on March 5 to announce either a firm intention to make an offer for the company or to walk away.
So how much might an offer value the firm at? Well, looking at the share price, the answer has to be… not a lot. French Conection’s market capitalisation was just over £20 million on Friday morning after the approaches were formally announced and it was only that high because the shares had risen sharply on the bid speculation.
The shares had looked like they were heading towards £5 each back in March 2004. But then they began a decline that saw them trading at less than 6p each at one point last autumn. At the time of writing this news story, they’re above 20p each.
French Connection’s directors appear to have been unwilling to sell in the past, despite the company’s mounting problems. But the last year has piled on the pressure even further and the retailer is just one of many companies that are assessing their options in the light of a pandemic whose effects will continue to be felt even after everyone in the UK has been vaccinated.
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