French Connection receives two takeover approaches as shares surge

The ailing clothing retailer French Connection has received two separate takeover approaches from potential suitors.

The company, which unsuccessfully sought to find a buyer in 2019, said it had been approached by the retail investor Spotlight Brands, with backing from the restructuring and investment firm Gordon Brothers. Spotlight has backed British brands including fitness-focused Sweaty Betty, while Gordon Brothers acquired the Laura Ashley brand last year following its administration.

The second approach has come from the brand investment platform Go Global Retail, in conjunction with HMJ International Services.

“Discussions with both Spotlight and Go Global remain at a very early stage,” said French Connection in a statement to investors. “Accordingly, there can be no certainty that an offer will be made, nor as to the terms on which any offer might be made. Further announcements will be made as appropriate in due course.”

However, French Connection noted that any offer for its business was likely to be made in cash. The suitors have until 5 March to make a formal offer.

News of the potential offers sent shares in French Connection 65% higher by late afternoon trading on Friday, to 25.8p, giving the retailer a market value of £25m.

Last year, French Connection warned that it could run out of cash unless sales improved or it received a cash injection.

The retailer, which was founded by Stephen Marks in 1972 and also owns the Great Plains brand, owns 68 stores and concessions in the UK as well as many overseas outlets. It employs about 780 staff. The company recorded a £7.3m pre-tax loss in its last annual results.

The takeover approaches come more than a year after French Connection called off plans to find a buyer following a year-long search. A sale would provide an exit for Mike Ashley’s Frasers Group retail business, which owns an almost-25% stake in French Connection.