Frasers Group has called on shareholders of Australian footwear retailer Accent Group to vote against chairman Lawrence Myers’ re-election at the retailer’s 20 November annual general meeting, reported The Australian.
The UK retail group, which owns 23% of Accent and has an outstanding A$0.65 ($0.46) per share takeover offer, said new board leadership was required to improve the retailer’s performance.
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It said it would support the re-election of all other directors.
Frasers submitted its takeover proposal in June. Accent rejected the unsolicited bid later that month, describing it as “opportunistic” and “materially inadequate”.
Frasers chief financial officer Chris Wooton said the vote had been incorrectly presented as a contest between the two companies.
He said Frasers backed Accent’s current board apart from Myers and was not pursuing control of the board.
“We believe a successful turnaround will require a change in board leadership,” Wooton was quoted as saying.
Frasers cited Accent’s A$13.8m statutory loss, A$48.6m goodwill impairment, lower underlying gross margins, increased debt, and two profit warnings over seven months.
It also questioned Accent’s dividend policy, saying the company paid A$29m in dividends while bank borrowings rose by A$74m to A$214m.
Frasers said borrowing should not be used to finance shareholder distributions, adding that operating cash flow did not cover lease payments, capital expenditure, and store acquisitions.
The campaign has governance implications for Frasers.
Under a previous agreement between the companies, voting against an Accent board recommendation could place Frasers’ board nominee at risk.
Accent has also received one strike on its remuneration report, while a second strike could lead to a board spill.
Accent said Frasers’ actions sought to divert attention from its takeover proposal made without a control premium during challenging retail conditions.
Its independent directors are voluntarily seeking re-election, allowing shareholders to decide the board’s composition.
Accent operates Hype, Athlete’s Foot, and Platypus, and sells footwear, including Dr Martens, Merrell, Reebok, Skechers and Vans.
Earlier this month, Frasers said it had secured majority control of German apparel company Hugo Boss by increasing its direct stake to 50.08% for €7.63m ($8.55m).
