Italian suitor eyes up Austin Reed

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The Independent Online

An aggressive Italian fashion retailer is this week expected to launch a takeover bid for Austin Reed, ending weeks of speculation over the retailer's soaring share price.

An aggressive Italian fashion retailer is this week expected to launch a takeover bid for Austin Reed, ending weeks of speculation over the retailer's soaring share price.

Marzotto, which markets the Hugo Boss clothing range, is understood to be planning to offer shareholders between 120p and 125p a share.

Austin Reed's largest single shareholder is Clerical Medical, which has a 4.38 per cent stake.

Well-placed sources have revealed that Marzotto is interested in Austin Reed labels, which include Chester Barrie, Stephens Brothers and Wright & Peel as well as Austin Reed itself. Marzotto is also keen on Austin Reed's licensing agreement with Polo Ralph Lauren to sell its Purple Label range.

Executives at Austin Reed, which has a market capitalisation of £33.6m, have for the last month been baffled by the company's soaring share price and unusually high trading volumes. Since 31 June, its shares have risen 28 per cent. They closed up 1p at 107p on Friday.

Earlier this month chairman Colin Evans attempted to flush out the identity of the mystery investor but a spokeswoman said on Friday that little progress had been made.

In February the blue-blooded retailer rebuffed an unsolicited offer, widely believed to be from an overseas company.

In April Austin Reed, which also owns the Country Casuals stores, revealed that it was in preliminary talks with a potential suitor. But since then the company has refused to give any indication on the progress of talks. Again, speculation has centred on an overseas buyer.

Austin Reed was founded 100 years ago and became the suit-maker to the upper-middle classes. Its customers have included Prince Charles.

In the last two years the company has lost ground to more aggressive retailers such as Next. In the year to 31 January 2000, profits fell from £5.1m to £1.3m and sales dropped from £120.1m to £113.6m.

In Italy, Marzotto has developed a reputation as an aggressive retailer. The company, which weaves and finishes wool as well as selling clothing, is in talks to acquire two other Italian fashion houses, Gianfranco Ferré and Cerruti.

With a market capitalisation of 696.88m euros, Marzotto produced a strong set of first-half results in July, with net income rising from lire 28bn to lire 33bn in the first six months of the year.

The figures were boosted by strong US sales of Hugo Boss and it is now understood that Marzotto is keen to extend its international presence.

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