Sports Direct ups stake in French Connection to almost 30%

Sports Direct has once again upped its stake in French Connection swooping on shares offloaded by the high street fashion chain's activist shareholders.

Mike Ashley's group, which built its stake in French Connection up to 11% in February, now has a stake of more than 27% after it acquired shares sold by Gatemore Capital Management and OTK Holding.

Gatemore and OTK, which between them had around 15% of French Connection's shares, had been trying to use their influence to affect change at the business, whose founder Stephen Marks still holds around 42% of its shares.

The activist shareholders had been unhappy at the performance of the loss-making business and objected to Marks holding the joint chairman and CEO role, which is a contravention of corporate governance guidelines.

Gatemore told The Telegraph that while Marks had made some concessions to its demands, such as shaking up its non-executive board, it was not happy with the pace of change at the business. "[We have] decided not to ride out the investment during this period of uncertainty in the UK retail market," the investor told the newspaper.

Ashley enjoys building stakes in retailers and holds shares in Debenhams, House of Fraser, Findel and Game Digital. The Sports Direct group also owns luxury multibrand retailer Flannels (bought in 2012) which is rapidly expanding its retail presence.

Ashley's intentions for French Connection are not known but his stake of 27% takes him closer to the 30% threshold at which point he would be obliged to make a takeover offer.