Asos stock jumps 17 percent on new takeover rumours

Friday, 29 August 2014
Shares in British online fashion retailer Asos (ASOS.L) jumped earlier this week amidst rumours of sound US takeover bid. Shares at the fashion e-tailer gained 17 percent after falling sharply in recent months. This Is Money’ reported that there was "vague talk" of a US cash bid in the region of 50 pounds a share. The British financial added that the reported buyer was believed to have approached 27.4 percent shareholder Bestseller, a Danish fashion business that also holds a stake in German rival Zalando.

Asos shares, a previous market darling that have fallen by almost two thirds this year, surged over 17 percent in barely two days to 26.65 pounds, boosting other online fashion stocks such as Boohoo (BOOH.L) and Italy's Yoox (YOOX.MI).

So far, Asos has declined to comment.

eBay and Amazon amongst suspected potential buyers for Asos

The company has had a meteoric rise since it listed on the stock market at only 20 pence in 2001, although its shares fell sharply in June after a fire at its distribution centre in northern England.

Back then, Asos also issued a full-year profits warning, saying that it would miss forecasts. The announcement wiped off its market value 1.2 billion pounds in a day.

Of all outstanding shares in Asos, 6 percent are out on loan - three times the market average.

Jefferies analyst David Reynolds said the takeover talk came as no surprise, given that U.S. companies are generating international revenue that they might not want to repatriate home because of taxation issues.

But Reynolds said he did not think that the "young, edgy" Asos brand would be a good fit for either eBay or Amazon: “It just seems improbable. I think it’s a cheap stock but I think the prospect of a genuine M&A inbound offer coming from the United States from Amazon or eBay is low," he said.

A trader closely following the stock but who preferred to remain anonymous dismissed the idea of a takeover, saying there is more concern in the market over the potential for another profit warning when Asos reports quarterly figures on Sept. 16.

Angela González Rodríguez

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