Sports Direct increases stake in French Connection to 27 percent

Mike Ashley’s Sports Direct now owns a 27 percent stake in troubled fashion retailer French Connection after buying shares from Gatemore Capital and OTK, two of the fashion chain’s activist investors.

As reported Thursday, Gatemore Capital and OTK, which held 8 percent and 7 percent stakes in French Connection respectively, have sold their entire holdings in the business after trying to drive change in the fashion retailer – even giving the CEO an ultimatum.

Activist investors gave up on trying to make French Connection’s CEO change his mind

“French Connection could have unlocked significantly more value during the period had it made more progress in fixing its corporate governance. French Connection remains a glaring example of the shortcomings of the UK Corporate Governance Code: namely, that companies can get away with such violations with zero repercussions to the people at the top,” Liad Meidar managing partner at Gatemore told ‘The Telegraph’.

After increasing its stake, Sports Direct has got closer than anyone else to the 30 percent minimum stake required by law to trigger a takeover bid. Actually, the sports apparel chain has enhanced its stake in the fashion retailer’s equity from the 11 percent it first purchased last February to this 27 percent.

Back in June, Gatemore and OTK joined forces and demanded French Connection’s CEO Stephen Marks to step down and consider other opportunities to turnaround the business, even a sale.

It’s worth recalling that Marks owns a 42 percent in the company and that this the fifth consecutive year of losses for French Connection

, which widened its losses from 3.5 million to 5.3million pounds last year.

French Connection Official Web