‘Step down’: Owner of Platypus, Athlete’s Foot cops hostile bid from UK investor

Accent Group, one of Australia’s biggest shoe and clothing retailers, could fall into British hands following a hostile takeover bid from UK sporting goods giant Frasers Group after the investor’s frustration about mismanagement and governance reached a tipping point.

Frasers, which is Accent’s biggest investor with a 22.9 per cent stake, is also pursuing a similar bid for the upscale German fashion brand Hugo Boss at a 4.3 per cent premium to its previous share price. But the UK company is so unhappy with the performance of the Australian footwear retailer’s leadership team – who oversee stores including Hype DC, Platypus, and Athlete’s Foot – that it isn’t offering Australian shareholders a premium to sell their Accent stock.

Accent’s strategic plans, capital management, executive pay and an ASIC investigation into potential insider trading by top executives including chief executive Daniel Agostinelli are among the reasons why Frasers had “significant concerns” about the company.

“Frasers believes that [chairman Lawrence] Myers has failed to provide the leadership necessary to steer Accent effectively through its recent period of poor financial performance, and should step down,” the UK bidder said in documents filed with the ASX.

“Frasers has made repeated attempts to engage constructively with Mr Myers and the Accent board in relation to a number of the above matters and has received no meaningful response,” it said.

Frasers Group presented shareholders with an unconditional on-market offer of 65¢ a share, or $315.8 million, to buy the remaining 485.8 million shares in the group it doesn’t already own. Accent’s share price closed 15.4 per cent higher on the news at 75¢ a share.

Accent operates nearly 900 stores across Australia and New Zealand, and has the exclusive distribution rights to sell brands like Vans, Hoka, Henleys, Dr Martens, Nude Lucy and more. However, the company’s share price has declined by 48 per cent over the past year.

Several issues have caught the attention of the British bidder, which is predominantly owned by UK retail billionaire Mike Ashley. Late last year, Accent’s board received a massive protest vote against executive pay at its annual general meeting. In February, the company increased first-half dividends for its shareholders while issuing a profit warning.

The Australian Securities and Investments Commission is conducting an investigation into potential insider trading by Agostinelli and other executives. Accent Group disclosed the ASIC probe last month and said the CEO’s on-market share sales had been pre-approved by its former chair, no charges had been laid, and Agostinelli “has the full support of the board in his ongoing role as CEO”.

Then, a strategy day held in mid-May failed to impress the market, Frasers said in company documents.

“We are a great believer in the strength of the brands sold through Accent’s retail network, but the company has failed to demonstrate that it can deliver the outcomes that these brands are entitled to,” Frasers chief financial officer Christopher Wootton said in a statement.

The UK company “now feels it is necessary to increase its ownership of Accent to achieve greater influence over Accent’s strategic direction in order to protect its investment”.

This masthead does not suggest that Frasers’ claims are correct, only that they have been made amid the battle for control of Accent.

Although Frasers is offering to take full ownership of Accent, it said it would be satisfied with a stake of at least 26 per cent, which would let it install a second director to the board to join British businessman Dave Forsey, who led Sports Direct for 15 years, Frasers’ best-known retail brand. A second member of the seven-member board would give Frasers Group greater influence on company strategy.

Frasers had lost confidence in Accent management’s vision and ability to roll out growth plans, its documents stated. Accent had said it intended to open at least 50 stores in the next six years, but documents from the recent investor day revealed these plans had been revised down to 30 stores within three years, with the target of 50 stores “deferred to an undefined time frame”.

Accent’s board urged shareholders to hold onto their shares and do nothing until they received its recommendations for the bid. The price offered was just the stock’s closing price from Friday, with no premium offered, and Frasers had paid an average of 90¢ a share when it raised its stake in early February “which is materially above the offer price”, Accent Group pointed out.

Frasers Group launched a similar bid for Hugo Boss last week. Frasers, which owns a 26 per cent stake in Hugo Boss, offered to pay €1.98 billion ($3.3 billion) to buy the rest of the German fashion group.

Frasers Group has run into its own governance issues. It has struggled to find big four accounting firms that will sign off on its accounts after expanding into a large and complex business with a retail property portfolio and stakes in rival businesses, Financial Times has reported. The company has been audited by mid-tier accounting firm RSM since 2020.

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