French Connection agrees to £29m takeover bid from second-largest shareholder

French Connection has accepted a £29 million offer from one of its biggest shareholders in a move that will take the listed fashion retailer private and lead to the retirement of its founder Stephen Marks.

The company said it had negotiated a deal with Apinder Singh Ghura, who already owns around 25.4% of the business and is its second-largest shareholder.

He will buy the company through MIP Holdings, which he controls together with Amarjit Singh Grewal and KJR Brothers Limited.

Ghura, whose address is in Newcastle according to Companies House, bought his stake at the start of the year from Frasers chief Mike Ashley for between £3 million and £4 million.

Just weeks later French Connection said it would review its options and try to find a buyer. Last month, the company said Ghura was leading a bid for the business.

The offer, at 30p per share, is around 92% higher than French Connection’s share price in February, before the company started looking for a buyer.

It is also close to a third higher than the company’s shares were trading for before Ghura’s bid was first revealed in September.

On Monday French Connection shares rose again, but have not yet pushed above 29p per share, implying that investors are unsure whether the deal will go ahead.

This is despite the backing of Stephen Marks, French Connection’s founder, chief executive and chairman, who owns a 43.6% stake in the business still.

Ghura said: “We are pleased to have reached an agreement with the French Connection directors on this recommended acquisition. We are looking forward to working with French Connection’s management to execute and implement MIP’s strategic plans to facilitate the future growth and profitability for the business.”

Marks said: “Over the last five years, French Connection has made significant progress in its plans to rationalise the size of its store portfolio and to return the French Connection Group to profitability.

“It was always our intention to look at the most appropriate ownership structure for the business once it was back on track, and, having conducted a formal sale process, the French Connection board has concluded that the offer being made by MIP is fair and reasonable.”

He added: “When the transaction closes, I will retire from French Connection. This is an appropriate time for me to step back from the business that I founded in 1972, and I would like to take this opportunity to thank all our people for their contribution to our achievements over the years. I wish them all every success in the future.”