German fashion brand Hugo Boss (BOSSn.DE), opens new tab on Thursday urged shareholders not to accept a €2 ‌billion ($2.3 billion) takeover offer from Britain’s Frasers Group, saying it was “financially inadequate”.

The company said the €38-per-share cash offer — a premium of just 4.3% to the share price when it was announced — reflected the legally required minimum price for Frasers to raise its stake ​rather than Hugo Boss’ intrinsic value or potential

“Hugo Boss has a well-defined strategy, a strong financial profile, ​and a compelling path to superior long-term value creation,” CEO Daniel Grieder said in ⁠a statement.

Shares in the maker of men’s suits and casualwear were little changed at around 1000 GMT, ​trading just below €38. The stock briefly jumped in early June after Frasers announced its bid, but remains about 50% below ​its July 2023 level.

“The nature of the offer was highly tactical” and “destined to face stiff resistance,” said Felix Jonathan Dennl, an analyst at Frankfurt-based Metzler.

He added Hugo Boss management had the backing of two independent financial institutions and a mandate to reject ​the bid.

UNFULFILLED HOPES

Grieder, who took over five years ago, set out to turn Hugo Boss into a ​leading global brand. But his expansion plans coincided with a post-pandemic slowdown in consumer demand as inflation surged.

Hugo Boss missed Grieder’s pledge ‌to ⁠return to pre-pandemic margins by 2025 and reported a 1% drop in sales last year, which it blamed on weak consumer demand in Britain and China.

In December, the company cut its 2026 operating profit forecast and launched a new strategy through 2028, dubbed “Claim 5 Touchdown”. The plan aims to improve efficiency in its stores, focus on faster-growing ​categories such as shoes and ​accessories, and expand in ⁠womenswear.

Frasers, which owns about 26% of Hugo Boss, launched the bid to raise its stake above 30% — the threshold at which German regulations require it to make ​a full takeover offer to other shareholders

The offer price is “less a statement of ​valuation and more ⁠the mechanical extension of an accumulation strategy”, Citi said in a note.

Dennl said Frasers’ low-premium offer preserved its strategic flexibility, leaving open the possibility of increasing its stake further without triggering a new takeover bid.

“While Hugo Boss’ management ⁠successfully held ​the line today, the pressure has intensified on CEO Daniel Grieder ​to demonstrate that the ‘Claim 5 Touchdown’ strategy can restore both top- and bottom-line growth in an increasingly volatile retail environment,” Dennl said. ($1 = ​0.8747 euros)