Boohoo Group has hit back at Frasers Group’s recent demands for a stronger role in its strategic review.
The online fashion giant accused Mike Ashley’s company of using its stake in Boohoo and other retailers to promote its own “commercial self-interest”.
It pointed to the Sports Direct owner’s investments in rival retailers, including Asos and House of Fraser, as evidence of a conflict of interest.
The business also argued that Frasers’ holdings in these competitors make it impossible for the group to act as an “independent shareholder”.
“Frasers is not just an investor in Boohoo; it is a trade competitor focused on its own commercial self-interest,” Boohoo said.
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Frasers, which owns a 27% stake in Boohoo, has been vocal in its demands during the company’s strategic review.
Launched last month, the review aims to “unlock and maximise shareholder value,” with the possibility of disposing of brands such as PrettyLittleThing, Karen Millen, Oasis, and Warehouse.
In an open letter earlier this week, Ashley demanded a “restriction on disposals without shareholder approval”.
It is understood it holds concerns that Boohoo co-founder Mahmud Kamani might buy back Boohoo and its brands at a lower price.
Kamani, who holds 23% of Boohoo’s shares, denied the claims, stating that he had “no intention” of making an offer for the business. This confirmation triggered six-month restrictions under the City takeover code.
Boohoo responded by clarifying that Kamani’s interests were “aligned with maximising value on behalf of all shareholders”.
It called on Frasers, Ashley, and his representative Mike Lennon to provide the same or “explain why they are unable or unwilling” to offer similar commitments.
The board also rejected Frasers’ calls for board representation, saying it would only offer a seat to an “appropriate” non-executive director. Boohoo warned that it would impose strict governance controls to ensure the company’s commercial interests were protected.
To address the boardroom dispute, Boohoo has set strict conditions should Frasers seek board representation.
Among these, Boohoo requests “representations and undertakings” from Frasers ensuring that any director it appoints has “no involvement in the commercial decision making of any competitor of Boohoo,” and does not share “competitively sensitive information.” Boohoo has also sought “an indemnity from Frasers in relation to any loss that Boohoo suffers if these representations… are breached.”
The two companies have been at loggerheads over the past couple of weeks with Frasers even setting up a dedicated website, Boohoo Deserves Better, urging the online fashion giant’s shareholders to rally around its grievances.
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