French Connection the UK fashion retailer LSE:FCCN has received two takeover bids, in this episode our resident financial expert Adrian Lawrence discusses this and the changing dynamics in the high street.
French Connection rejected a takeover in January 2020 as being too low, that bid was around 40p but since then the high street shopping channel in the UK has been very seriously impacted by the three pandemic lockdowns. The share price has been bombed out as have other companies who operate in the retail, leisure or hospitality sectors. Towards the end of last year 2020, their share price was trading around the 10p level. Now following on from the speculation surrounding retail brands and the actual announcement on Friday of formal takeover approaches, their price has jumped to 25p.
You can find out more about FCCN here : French Connection Group PLC / LSE:FCCN
There is plenty of speculation now about if a deal will now go through and if so at what price. There is talk in the forums of a price range betwen 40 and 50p which if try would be great news for the shareholders of FCCN.
The company is owned 35% by its founder who is still CEO and 35% by Mike Ashleys Sports Direct company so no deal can happen without the agreement of at least one or both of those parties. That said the company announced a year or so ago that it was open to a sale, so there is a good chance this will go through. Boohoo completed their purchase of selected assets from the Arcadia group last week so there are similar deals being done in the market, and Boohoo itself is rumoured to be a potential third bidder, if so that would open the potential for a bidding war.
The UK retail sector has been changing for nearly 20 years as more and more retailers appreciate the potential of the internet as a sales channel, now following the pandemic the companies that have invested in their digitial solutions are being rewarded with strong sales, for example Next has hugely increased online sales and has been able to offset the closure of their high street stores via their website. The companies without a web channel that is sufficiently developed are suffering.
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