Boohoo outlines ‘concerns in relation to Frasers’ behaviour’ in new letter

Boohoo said it is just at the beginning of determining what’s best for all shareholders and will provide more details of its core brands in its interim results. It expects the review will take several months.

In a new letter, Boohoo said the board is committed to “open and transparent engagement” with shareholders but is taking steps to drive the group in the interest of all – “not just Frasers’ self-interest”.

It added that it has been clear with Frasers that it will only offer a seat for an appropriate non-executive director and that governance controls will be required prior to any appointment made.

Boohoo said it has “repeatedly sought assurances from Frasers” as well as non-public information regarding Frasers founder Mike Ashley’s interests and role in competing businesses. It said no such information has yet been given.

In the letter, Boohoo explained its concerns about Frasers’ behaviour. It cited that Frasers is not an independent shareholder in the group and is a “trade competitor that is seemingly focused on its own commercial self-interest”.

It points to Frasers’ brands competing with the group’s brands such as Boohoo, Pretty Little Thing, Karen Millen and Debenhams.

Boohoo also referenced Frasers being a large shareholder in Asos, another competitor, as well as it having a “well-publicised history of making significant investments” in other UK competitors. 

“The Board considers it wholly inappropriate for Frasers to seek to leverage its significant shareholding in Boohoo and other UK retailers to promote its own commercial self-interest, such as Frasers Plus, at the expense of the other shareholders and will take all steps necessary to protect its commercial position and shareholders best interests,” the letter continued.

Future of the company

Frasers also allegedly sent a separate letter to Boohoo, agreeing to a meeting with Boohoo to discuss Frasers’ concerns with any potential asset disposals as well as the board’s concerns with Frasers’ requests for board representation. 

Boohoo said: “This meeting was suggested by Boohoo to Fraser’s last week and the Board is therefore disappointed that Frasers omitted to mention this meeting in their open letter, which was therefore inaccurate and misleading.”

Boohoo has stated the commitments it needs from Frasers before it agrees to board representation.

Some of the commitments include: Frasers nominated director has no involvement in the commercial decision making of any competitor of Boohoo; a statement from Frasers of having no intention to make an offer for Boohoo or buy any assets; and that Frasers will not do things such as merge Boohoo with a competitor without unanimous board agreement.

In another part of the letter, it states that Boohoo’s other major shareholder Mahmud Kamani has confirmed he has no intention to make an offer for the group.

It concluded: “The board believes that the group is fundamentally undervalued and looks forward to unlocking and maximising shareholder value through the review of its options.

“It stresses to Frasers that their continual legal letters and public posturing are not conducive to maximising value for all shareholders, and encourages them to enter into constructive discussions with the board.”