The group, under the leadership of Mike Ashley, has proposed a cash offer of Nkr10 ($0.89) per share for the equity it does not already own in XXL, which is a 25% premium on the recent closing stock price.
The total value of the transaction for the remaining shares stood at approximately Nkr246m ($22.039m) on 6 December.
Frasers CEO 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."
Frasers currently owns a 25.8% stake in XXL, which operates across Norway, Sweden, Finland, Denmark, and Austria.
Altor is the largest shareholder with a 45.9% stake and 33.3% of ordinary voting rights. Frasers holds the position of XXL's second-largest shareholder, controlling approximately 32.5% of the voting rights.
XXL, with a workforce exceeding 4,000, operates more than 85 stores in Scandinavia, offering a range of products for sports, biking, hunting, skiing, and other outdoor activities.
The sports retailer has faced a challenging market environment, marked by ten quarters of declining growth. A recent shareholder decision rejected a proposed Nkr600m rights issue by management.
Frasers said XXL’s proposed alternative rights issue was ‘wrong’ and believes it to be legally questionable. It claimed its execution would result in significant harm to both Frasers and other minority shareholders of XXL, who would face substantial dilution due to the issuance of commission shares under the terms of the alternative structure.
Furthermore, Frasers said that it is unreasonable to ask shareholders, particularly minority ones, to provide additional funding to XXL without a clear and viable plan to address the underlying causes of its ongoing challenges.
Recently, Frasers lowered its fiscal year 2025 (FY25) adjusted profit before tax outlook due to the recent decline in consumer confidence before and after the UK budget and tough trading conditions.
Following a revenue drop in the first half of FY2024/25 across all retail segments, the group now anticipates an adjusted pre-tax profit between £550m and £600m for the full year. Its share price declined by over 10% on 5 December.
GlobalData retail analyst Aliyah Siddika said: “It has been a disappointing start for Frasers Group in the first half of FY2024/25. The group reported an 8.3% decline in revenue, with all fascias of its retail arm experiencing a decrease. While the group attributes this performance to weak consumer confidence following the budget, the conglomerate has faced significant challenges within its premium lifestyle operations, with this arm reporting the poorest result.
“Despite expectations that the Summer of Sport would boost growth in its sports division, UK sports retail revenue decreased by 7.6%. This result mirrors a broader slowdown in the UK sportswear market, with industry giants like NIKE and adidas reporting weaker results due to subdued consumer demand amid financial woes. Frasers Group must emphasise its proposition to capture consumer spending in the second half, especially during the holiday season when sportswear and footwear sales prospects should improve as consumers buy these items as gifts. Frasers Group must focus on its Sports Direct fascia, highlighting key brands that will appeal to savvy shoppers seeking brands this Christmas while navigating further revenue challenges for its GAME and Studio Retail operations.”
Siddika further noted that its Premium Lifestyle segment experienced revenue decline by 14.1% in H1, even though Frasers continued its efforts to build stronger connections with existing brand partners and secure new collaborations with high-profile brands such as FENDI, Ferragamo, and Prada Beauty.
She added: “The group experienced the steepest decline in its premium lifestyle segment with revenue falling by 14.1% in H1. This decrease occurred despite Frasers' ongoing efforts to strengthen relationships with brand partners and establish new partnerships with prestigious names like FENDI, Ferragamo, and Prada Beauty. The slowdown is part of a broader declining luxury market with LVMH reporting a softer performance in recent results. Frasers' focus on its physical store presence could benefit its premium fascia, as consumers see the appeal of viewing big-ticket items in person before purchasing. However, enhancing the online channel is also crucial to provide a seamless shopping experience for customers who visit stores to view products but purchase online after price comparisons.
“Frasers Group's international retail segment also failed to deliver results with revenues down 5.3% in H1. The conglomerate has strategically acquired and partnered with sports retailers globally, including Twinsport in the Netherlands and Holdsport in South Africa and Namibia. While the benefits of these acquisitions have not yet been fully realised, they hold promise for future results by expanding the group's presence and opportunities in new markets.”
