Frasers Group is planning to submit a takeover offer for Norwegian sporting goods chain XXL Sport & Villmark as it eyes further international expansion.
The Sports Direct owner, which is the chain’s second largest shareholder, holding a 25.8% stake, will offer 10 kroner for every share of equity that it does not own, valuing the retailer at around £17.45m.
Frasers said it has the “relevant experience to have a chance at saving XXL”, which has been suffering with profitability challenges in part due to stock availability issues. The retailer operates 85 stores in Norway, Finland and Sweden.
The group said, subject to satisfactory due diligence and completion of the offer, that it was willing to provide support XXL’s stock shortage by cosigning up to £35m (500m kroner) of stock on a delayed payment basis whereby XXL will not be required to repay Frasers until the stock is sold.
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It added it can “provide XXL with products and brands that will make XXL’s retail offering more attractive and ease XXL’s cash requirements”.
The offer document will be available to XXL shareholders in January 2025, Frasers confirmed.
Group chief executive Michael Murray said: “Our strategic vision and industry experience position us uniquely to help XXL navigate its current challenges. We are committed to ensuring that XXL reaches its full potential.”
Earlier this week the group said it was lowering its profit expectations for the year by £25m, citing “tougher” trading conditions after half-year sales in its retail arm fell 8.4% to £2.45bn.
The retail giant reported its pre-tax profit had dropped 33% to £207.2m during the period, down from £310.2m the year before, due to a decrease in foreign exchange and the material decline in the Hugo Boss share price. On an adjusted basis, it slipped 1.5% to £299.2m.
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