French Connection publishes scheme of arrangement for takeover
A week after French Connection accepted a takeover offer from its second-largest shareholder, the fashion retailer has published the Court-sanctioned scheme of arrangement whereby the business will change hands, with MIP Holdings to become the new owner.
It said MIP is a newly incorporated entity directly owned and controlled by Apinder Singh Ghura, Amarjit Singh Grewal and KJR Brothers Limited. It will acquire the entire issued and to be issued ordinary share capital of French Connection not currently owned by Apinder Singh Ghura, who previously held the around a quarter of the firm’s shares having acquired them when Frasers Group exited its position in the firm.
The company said: “The boards of French Connection and MIP are pleased to announce that the scheme document in relation to the scheme, together with the associated Forms of Proxy, is today being published and posted to French Connection Shareholders.”
The document contains, among other things, the full terms and conditions of the acquisition, a letter from the chairman of French Connection, an explanatory statement pursuant to section 897 of the Companies Act, an expected timetable of principal events and more.
The retailer also said that its directors “consider the terms of the acquisition to be fair and reasonable” and “unanimously recommend that French Connection Shareholders vote in favour”.
Assuming they do vote in favour — and given that the firm’s biggest shareholder, founder Stephen Marks, is going to do so, it seems likely — it will bring to a close a long drawn out process that has seen the once star brand battling to get back to health.
The company first listed in 1995 with a price of less than 30p a share and saw a steady increase for the next nine years with the price rising to almost £5 a share. But then a steady decline set in as the retailer’s performance faltered and in the depths of the market crash last year, the shares were changing hands a 4.6p each.
It would have seemed like a risky investment back then, but with the share price currently at 29p (having leapt from 24p on news of the takeover offer), anyone who bought at the time would have had a good deal.
But the business remains a challenged one. It has closed a number of its stores and its recovery is still a work in progress.
Back in the spring, it said it was heading in the right direction, but the pandemic had clearly been a massive challenge and it reported revenue plunging over 40% to £71.5 million in the year to January.
It had been loss-making before the pandemic, but its losses widened, “driven by the significant decline in sales, additional one-off stock provisions, offset by cost reductions across all areas”.
Those figures came a month after it said it was up for sale with Stephen Marks clearly throwing in the towel after years of trying to turn the business around.
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