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Frasers Group plc intends to launch a voluntary offer for all of the shares in XXL ASA at NOK 10 per share
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6 December 2024 – Frasers Group plc (“Frasers”) intends, through a controlled subsidiary, to launch a voluntary offer for all of the shares in XXL ASA (“XXL”), which Frasers does not already own, at NOK 10 per share in cash.
Further to the announcement made by XXL on 28 November 2024 in relation to, among other things, the shareholder vote against XXL’s proposed rights issue of NOK 600 million, as announced on 6 November 2024 (the “Rights Issue”), and XXL’s plan to proceed with the alternative transaction structure, as described in XXL’s announcement on 19 November 2024 (the “Alternative Rights Issue”), Frasers has taken quick action to consider and assess the possible options available to it. We believe that the proposed Alternative Rights Issue is wrong, its legality is questionable and its implementation will be extremely detrimental to both Frasers and the other minority holders of XXL shares, who will be unfairly and significantly diluted by the commission shares to be issued under the terms of the Alternative Rights Issue. In addition, we do not believe that shareholders, especially minority shareholders, should be asked to provide further funding to XXL when it has not articulated any clear plan to address and resolve the root causes of its persistent problems.
Frasers is XXL’s second largest shareholder, with c.32.5% of the voting rights and c.25.8% of the issued share capital, and we have been supportive of the commercial and brand opportunities available to XXL. With our leading retail expertise, we believe Frasers has the relevant experience to have a chance at saving XXL. Frasers is ready to support XXL and a summary of Frasers’ proposals is set out below.
Accordingly, having carefully considered the options available to Frasers, Frasers is announcing a voluntary offer for all of the shares in XXL, which Frasers does not already own (the “Offer”).
“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” says Michael Murray, CEO of Frasers.
About the Offer
The Offer includes a total consideration for all of the shares in XXL of approximately NOK 246,357,450. The Offer price represents a premium of 25% over the closing price of NOK 8.00 on 5 December 2024.
In comparison to the Rights Issue and Alternative Rights Issue, the Offer represents an opportunity for shareholders in XXL to monetize their shareholding rather than providing additional funding to XXL on a diluted basis, as follows:
• Under the Rights Issue, non-participating shareholders would have faced a dilution of approximately 99% based on a subscription price of NOK 0.1 per new share.
• Similarly, under the Alternative Rights Issue, non-participating shareholders will face a potential dilution of approximately 99% based on a capital raise of NOK 375 million assuming a subscription price of NOK 0.1 per new share. Furthermore, shareholders who participate on a pro-rata basis, excluding those in the underwriting consortium, will be diluted by approximately 15% due to the proposed underwriting fee of 18% payable in shares at the assumed subscription price of NOK 0.1 per new share.
Frasers confirms that it has the necessary funds available to cover the consideration payable under the Offer in full without requiring additional financing.
Interim financing solution
It is well reported that XXL is suffering from an inability to access adequate levels of appropriate stock, in turn damaging sales volumes and therefore its business. Frasers is willing to support XXL, if the Offer is successfully completed, in order to: (i) address XXL’s stock shortage; (ii) provide XXL with products and brands that will make XXL’s retail offering more attractive; and (iii) ease XXL’s cash requirements.
As we understand XXL is short of sufficient funds to pay its suppliers, Frasers has a solution for this cash shortage which also helps with the stock shortage. Subject to satisfactory due diligence and completion of the Offer, Frasers is willing to consign up to NOK 500 million of stock on a delayed payment basis whereby XXL will not be required to repay Frasers until the stock is sold.
Frasers is open to discussing with XXL alternative means of providing liquidity, such as the purchase and consignment of XXL’s existing stock orders from suppliers.
Conditions to the Offer
Full details of the Offer, including all of its conditions, will be described in an offer document (the “Offer Document”) that will be sent to all eligible XXL shareholders, subject to review and approval by the Oslo Stock Exchange, if the Offer is launched. Frasers expects that the Offer Document will be posted, or otherwise made available, to XXL shareholders in January 2025. Completion of the Offer will be conditional upon each of the following conditions being satisfied or waived (each one of which may be waived by Frasers, in whole or in part, in its sole discretion), and Frasers reserves the right not to launch the Offer if it becomes clear that any of these conditions will not be met:
- On completion of the Offer, a sufficient number of shareholders having validly accepted the Offer such that Frasers will hold more than 50% of XXL’s shares and votes, on a fully diluted and converted basis.
- No material adverse change in XXL or its group occurs, including in respect of the financial condition or operations of XXL as compared with the position set out in the statements contained in XXL’s third quarter 2024 results.
- Receipt of all consents and approvals required from applicable governmental, regulatory and competition authorities, and any required third-party approvals, in each case, on terms satisfactory to Frasers.
- No legal action being taken or threatened that would restrain or prohibit the consummation of the Offer or impose conditions upon Frasers or its affiliates, XXL or any of its subsidiaries which are not acceptable to Frasers.
- No changes to the share capital, or issuance of rights which entitle holders to demand new shares or similar securities, in XXL or any of its direct or indirect subsidiaries, nor any conversion of B shares to A shares, or dividends or other distributions to XXL shareholders, taking place.
- No material transactions occur with XXL or its group, including decisions to merge, demerge, acquire, or sell significant assets, and the Alternative Rights Issue does not proceed.
- XXL continues its business as usual.
- No event of default or acceleration occurring in respect of XXL’s financing arrangements.
- Completion of due diligence regarding XXL’s current and future cash flows, to the satisfaction of Frasers, that the NOK 500 million of stock consigned to XXL by Frasers, in combination with XXL’s available liquidity, will be sufficient to satisfy XXL’s cash requirements over the next 12 months.
The Offer will not be subject to any other financing or due diligence conditions.
It is expected that the Offer will be completed in the first quarter of 2025, following receipt of regulatory approvals and satisfaction of all other Offer conditions. The Offer may only be accepted based on the Offer Document.
For further information, please contact:
Investor Contact
Frasers Group plc
Robert Palmer, Company Secretary
T. +44 344 245 9200
E. company.secretary@frasers.group
Chris Wootton, Chief Financial Officer T. +44 344 245 9200
E. financial@frasers.group
Media Contact
Keith Bishop Associates, PR Advisors
Gary Thompson
T. +44 7881 952441
E. gary@kbapr.com
White & Case LLP and Advokatfirmaet Schjødt AS serve as legal advisers, and Danske Bank A/S, Norwegian Branch serves as financial adviser and receiving agent, to Frasers.
About Frasers
Frasers started as a small store in Maidenhead in 1982 and from there, grew to become a global powerhouse. As the business evolved, 2019 saw the rebrand of Sports Direct International to Frasers Group plc; a reflection of the group’s growth and change in market identity.
Led by Chief Executive Michael Murray, the business is set on a formidable upwards trajectory as it continues to expand with its pioneering approach to retail. Frasers provides consumers with access to the world’s best Sports, Premium and Luxury brands with a vision to build the planet’s most admired and compelling brand ecosystem.
As a leader in the industry, Frasers is committed to rethinking retail by driving digital innovation and providing unique store experiences to its consumers globally.
Important notice
The Offer and the distribution of this announcement and other information in connection with the Offer may be restricted by law in certain jurisdictions. The Offer and the Offer Document are not to be regarded as an offer, whether directly or indirectly, in jurisdictions where, pursuant to legislation and regulations in such relevant jurisdictions, such an offer would be prohibited. Shareholders not resident in Norway wanting to accept the Offer must make inquiries regarding relevant and applicable legislation, including but not limited to whether public consent is required and any possible tax consequences. The Offer will not be made to, either directly nor indirectly or on behalf of, shareholders in any jurisdiction where presenting the Offer or acceptance thereof would be in conflict with the laws of such jurisdictions including, but not limited to, shareholders present in, with registered or mailing addresses in, or who are citizens of Canada, Australia, New Zealand, South Africa, Hong Kong and Japan and Frasers retains the right not to accept acceptances of the Offer from such shareholders.
Each shareholder should study the Offer Document carefully in order to be able to make an informed and balanced assessment of the Offer and the information that is discussed and described therein. Shareholders should not construe the contents of this announcement as legal, tax or accounting advice, or as information necessarily applicable to each shareholder. Each shareholder should seek independent advice from its own financial and legal advisors prior to making a decision to accept the Offer.
This announcement is not intended to be and does not constitute or contain any investment recommendation as defined by Regulation (EU) No 596/2014 (as it forms part of the domestic law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018).
No profit forecasts or estimates
No statement in this announcement is intended as a profit forecast or profit estimate and no statement in this announcement should be interpreted to mean that earnings or earnings per share for the current or future financial years would necessarily match or exceed the historical published earnings or earning per share.
Forward-looking statements
This announcement, oral statements made regarding the Offer, and other information published by Frasers may contain statements which are, or may be deemed to be, “forward looking statements”. Such forward looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and on numerous assumptions regarding the business strategies and the environment in which the XXL group will operate in the future and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. The forward-looking statements contained in this announcement relate to the XXL group’s future prospects, developments and business strategies, the expected timing and scope of the Offer and other statements other than historical facts. In some cases, these forward looking statements can be identified by the use of forward looking terminology, including the terms “believes”, “estimates”, “will look to”, “would look to”, “plans”, “prepares”, “anticipates”, “expects”, “is expected to”, “is subject to”, “budget”, “scheduled”, “forecasts”, “synergy”, “strategy”, “goal”, “cost-saving”, “projects” “intends”, “may”, “will” or “should” or their negatives or other variations or comparable terminology. Forward-looking statements may include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses, contract renewals and future prospects; (ii) business and management strategies and the expansion and growth of XXL’s operations; and (iii) the effects of global economic and political conditions and governmental regulation on XXL’s business. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. These events and circumstances include changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or disposals. If any one or more of these risks or uncertainties materialises or if any one or more of the assumptions prove incorrect, actual results may differ materially from those expected, estimated or projected. Such forward looking statements should therefore be construed in the light of such factors. Frasers nor any member of its group, nor any of its respective members, associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur. Given these risks and uncertainties, potential investors should not place any reliance on forward looking statements. The forward-looking statements speak only at the date of this document. All subsequent oral or written forward looking statements attributable to any member of the XXL group, Frasers or any member of their respective group, or any of their respective members, associates, directors, officers, employees or advisers, are expressly qualified in their entirety by the cautionary statement above. Frasers and each member of its group expressly disclaim any obligation to update such statements other than as required by law or by the rules of any competent regulatory authority, whether as a result of new information, future events or otherwise.
Notice to United States
U.S. Holders (as defined below) are advised that the shares of XXL are not listed on a U.S. securities exchange and that XXL is not subject to the periodic reporting requirements of the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”), and is not required to, and does not, file any reports with the U.S. Securities and Exchange Commission (the “SEC”) thereunder. The Offer will be made to holders of XXL shares resident in the United States (“U.S. Holders”) on the same terms and conditions as those made to all other holders of shares of XXL to whom an offer is made. Any information documents, including this announcement, are being disseminated to U.S. Holders on a basis comparable to the method that such documents are provided to the Company’s other shareholders to whom an offer is made. The Offer is being made by Frasers and no one else.
The Offer relates to shares of a Norwegian company listed and trading on Oslo Børs and is subject to the legal provisions of the Securities Trading Act regarding the implementation and disclosure requirements for such an offer, which differ substantially from the corresponding legal provisions of the United States. For example, the financial statements and certain financial information in this announcement have been determined in accordance with the International Financial Reporting Standards (“IFRS”) and may therefore not be comparable to the financial statements or financial information of U.S. companies and other companies whose financial information is determined in accordance with the Generally Accepted Accounting Principles of the United States.
The Offer is being made to U.S. Holders in compliance with section 14(e) and Regulation 14E under the U.S. Exchange Act, including available exemptions thereunder, and otherwise in accordance with the requirements of Norwegian law. Accordingly, the Offer is subject to disclosure and other procedural requirements, including with respect to the offer timetable, that are different from those would be applicable under U.S. domestic tender offer procedures and law. Furthermore, the payment and settlement procedure with respect to the Offer will comply with the relevant rules of the Securities Trading Act, which differ from payment and settlement procedures customary in the United States, particularly with regard to the payment date of the consideration.
Pursuant to an exemption from Rule 14e-5 under the U.S. Exchange Act, Frasers and its affiliates or brokers (acting as agents for Frasers or its affiliates, as applicable) may from time to time, and other than pursuant to the Offer, directly or indirectly, purchase or arrange to purchase, shares or any securities that are convertible into, exchangeable for or exercisable for such Shares outside the United States during the period in which the Offer remains open for acceptance, so long as those acquisitions or arrangements comply with applicable Norwegian law and practice and the provisions of such exemption. To the extent information about such purchases or arrangements to purchase is made public in Norway, such information will be disclosed by means of a press release or other means reasonably calculated to inform U.S. Holders of such information. In addition, the financial advisors to Frasers may also engage in ordinary course trading activities in securities of the Company, which may include purchases or arrangements to purchase such securities.
Canada
Neither this announcement or the Offer Document nor any copy of thereof may be taken or transmitted into Canada or distributed or redistributed in Canada or to any individual outside Canada who is a resident of Canada, except in compliance with applicable rules.
Australia
The Offer will not be made directly or indirectly in or into and may not be accepted in or from Australia. Accordingly, if any copies of this announcement or the Offer Document (and any accompanying documents) are mailed or otherwise distributed or sent in or into Australia, that action does not constitute an offer and any purported acceptance by or on behalf of an Australian resident will be invalid.
No document in connection with the Offer has been lodged with the Australian Securities & Investments Commission (“ASIC”) and ASIC has not approved the Offer in Australia.
Japan
Neither this announcement or the Offer Document nor any copy of it may be taken or transmitted into Japan or distributed or redistributed in Japan or to any resident thereof for the purpose of solicitation of subscription or offer for sale of any securities or in the context where its distribution may be construed as such solicitation or offer.
Kilde
