French Connection rejected bid in January, share price plunged since then

By

Sandra Halliday

Published
May 15, 2020

Troubled fashion retailer French Connection rejected a private equity takeover bid in January that would have valued the firm at 41.4p a share. 

The bid was at a premium of 18% to the share price at the time, and with the shares currently trading at only a little over 5p each, that premium would now be many times higher. At its current share price, the firm has a market capitalisation of less than £5 million.

The bid, which was originally placed in December, came from ex-All Saints/USC chief Stephen Craig in partnership with two private equity firms, according to reports.

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But the following month, the board decided not to recommend the bid to shareholders. The news has only emerged now due to the expiry of a non-disclosure agreement.

French Connection had earlier put itself up for sale, but in January said it was no longer in a formal sale process. It also said it wanted to focus on a self-generated turnaround with its store portfolio being right-sized and more investment in online.

The company made a loss of £2.9 million in the year to January but while the previous year had seen it making profits, the figure was only £0.8 million.

It has seen many years of weak performance that have caused its share price to decline. French Connection shares changed hands at a high of 487p each around 16 years ago, but had fallen to 74p a decade later. In more recent times, their highest level was 61p in November 2018, but they’ve been declining steadily since April last year, before falling off a cliff in the wake of the coronavirus crisis.