Founder Stephen Marks sells struggling French Connection for £29m – and retires after 50 years
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Stephen Marks has finally agreed the sale of his struggling French Connection in a deal that values it at £29million.
Shares in the fashion company, known for its FCUK label, rose 20.8 per cent, or 5p, to 29p after the deal was announced.
The firm’s second largest investor, Newcastle businessman Apinder Singh Ghura, who has a 25 per cent stake, will buy the shares he does not already own for 30p each through a newly formed business, MIP Holdings.
Selling up: Stephen Marks, who founded French Connection in 1972 and is the chairman and CEO, will sell his 43.6 per cent stake for £12.6m
Marks, who founded French Connection in 1972 and is the chairman and chief executive, will sell his 43.6 per cent stake for £12.6million and retire.
The 75-year-old said French Connection had made ‘significant progress’ returning toward profitability and the rise in share price since the sale was announced reflects the brand’s potential.
Marks (pictured) said: ‘When the transaction closes, I will retire from French Connection. This is an appropriate time for me to step back from the business I founded in 1972.
‘The price we have negotiated is at a significant premium to the share price prior to the commencement of the offer period and demonstrates the potential offered by the French Connection brand.’
He said the board was ‘unanimous’ in recommending the deal to shareholders.
French Connection at its peak in 2004 was worth around £500million but fell out of favour with younger shoppers as rivals such as Zara and Topshop gained steam.
It has not been profitable for a decade. It put itself up for sale in March and talks with potential bidders caused its share price to surge, prompting retail tycoon Mike Ashley to sell the 25 per cent stake he bought in 2017.
Ashley’s holding was picked up by Ghura, who spent years in the clothing industry before shifting into other investments such as property and care homes.
Ghura, who said MIP was ‘pleased to have reached an agreement’.
The businessman added: ‘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.’
Investment platform AJ Bell’s Russ Mould said French Connection’s best days are ‘well and truly behind it’ but the buyers will be able to quickly ‘wring cash out of it’.