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08 Dec 2020 | 12:50

Studio Retail puts itself up for sale, shares jump

(Sharecast News) - Studio Retail Group has put itself up for sale after ceding to the concerns of Mike Ashley's Frasers Group, its largest shareholder. The home shopping retailer said Frasers, which has a 37% stake, believes its business is "misunderstood" by the market and is therefore "significantly" undervalued.

In a letter sent in October, Frasers said: "Although this may be fixable over the long-term, the group should conduct a strategic review."

Studio Retail - which rejected a £140m bid from Ashley last year - said that following discussions with its second largest shareholder, Schroder Investment Management, it had agreed to go ahead with the review with a view to maximising shareholder value, including putting itself up for sale.

Between them, Frasers and Schroders control around 56% of the business.

A formal sales process has now been launched, with Stifel Nicolaus Europe appointed sole financial adviser. Studio Retail warned there was no certainty any offer would be made, nor that any offer would be accepted.

The update came as the group, formerly called Findel, announced adjusted pre-tax profits of £17.7m for the 26 weeks to 25 September, a 52% surge, while group revenues jumped 17.2% to £268m.

The retailer, which has benefited from the boom in online shopping during the pandemic, said its active customer base was 2.1m as at 25 September, a 15% improvement.

As at 1230 GMT, shares in Studio Retail were trading up 7% at 281.55p.

Retail analyst Nick Bubb said: "The group has a market cap of just under £230m, and the other main shareholder, Schroders, has given its backing to the plan, so Studio Retail is in play. But it is not clear whether Frasers itself will be interested in bidding."
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