Asos shares soar on renewed takeover rumours

Tuesday, 07 October 2014
Asos' stock soared Monday on renewed takeover bid rumours. Private bank UBS spiked the attention around a potential takeover of the British Internet fashion giant, suggesting that Amazon could pay up to 50 pounds a share for Asos. This would be a 50 percent premium over Asos current price, highlighted analysts following the stock.

In a note issued Monday, UBS analysis team hinted that the reported deal would help Asos cut operating costs, while for Amazon it would “increase the strength and number of brand relationships and give access to a fashionable, low price own-label offering”, reported the ‘Independent’.

Amazon reportedly to pay up to 50 pounds per each Asos share

Asos shares soared nearly 15 percent Monday after analysts at UBS said the online fashion retailer was “ripe” for a takeover, with rival Amazon the most likely suitor.

“We think an acquisition of Asos would increase the strength and number of brand relationships and give access to a fashionable, low price own label offering,” Adam Cochrane from UBS said.

It is worth a mention that Asos has issued three profit warnings in the past seven months, being subject to previous takeover speculation, with eBay and Amazon cited as the most likely pretenders.

In a note to investors, UBS added that “significant value” could be added to Asos if it was combined with a larger company, estimating that Amazon could pay as much as 50 pounds per share for the online retailer.

On the back of the news, shares in Asos gained 304 pence to 2,227 pence.

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