Asos could potentially be a target for acquisition, but any interested party must consider its largest shareholder

Last year, Asos dismissed a rumoured bid from Trendyol, but as the retailer continues to struggle, other potential buyers may be considering a discounted acquisition. However, they would need to negotiate a deal that includes its largest shareholder.

The Sunday Times initially reported that Trendyol, a Turkish competitor backed by Chinese e-commerce titan Alibaba, proposed a £1bn takeover bid in December of the previous year.

Trendyol, reportedly working with Morgan Stanley (NYSE: MS), even approached Anders Povlsen, owner of Bestseller and the largest shareholder of Asos, to gauge his interest in a potential deal.

Despite these efforts, a deal did not materialize six months later, and it is believed that there are no active discussions with Trendyol at present.

Meanwhile, Asos’ share price has nearly halved since December, dropping to 383p, which may attract other potential buyers interested in acquiring a legacy brand at a discounted price.

Potential buyers often emerge when a struggling company, like Asos in this case, shows signs of recovery. The prospective buyer may choose to acquire the company while it is still in the recovery phase, rather than waiting until the price increases.

However, Asos’ recent performance suggests otherwise, with widening losses, ongoing operational challenges, and a need to raise £75mln to bolster its debt-laden balance sheet.

Frasers, a retailer known for acquiring struggling brands like Gieves & Hawkes and I Saw It First, which already owns approximately 7% of Asos, could be closely monitoring the situation.

Other potential buyers could include competitors like Shein, looking to increase their presence in Asos’ primary markets, the UK and Ireland. Amazon and eBay have also been rumoured as potential bidders, although these rumours have not been confirmed.

However, any potential bid would need to involve Asos’ largest shareholder, Polvsen and Bestseller, which owns about 26% of Asos. The Swedish retailer has weathered Asos’ highs and lows and has been hesitant to sell so far.

John Stevenson, a retail analyst at Peel Hunt, speculates that while Bestseller may not be interested in selling, they could potentially join a consortium to privatize the company.

While many companies may be watching Asos’ situation for potential deal opportunities, the final decision still lies with Bestseller and Povlsen.

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