Frasers Group has taken aim at boohoo co-founder Mahmud Kamani ahead of a crucial vote on 20th December which will decide whether he is removed from the board and Mike Ashley appointed to it.
After boohoo made a direct appeal to shareholders to vote against appointing Sports Direct CEO Ashley and Mike Lennon – highlighting the latter’s reputation as an insolvency expert, and potential conflicts of interest between the businesses – Frasers published another open letter which pulled no punches.
Warning that Kamani – who recently moved into the role of executive vice chair, with Tim Morris installed as independent chair and Dan Finley appointed as successor to John Lyttle as CEO – has the board “in his grip”, it stated: “boohoo has grossly exaggerated any perceived conflicts and governance concerns as a thinly-veiled excuse… it is not because perceived conflicts would cause real issues.
“In Frasers’ view, what this boils down to is that Mahmud Kamani… does not want Mr Ashley or Mr Lennon appointed, as he fears this would dilute his influence over the board.”
It added: “Frasers, Mike Ashley and Mike Lennon confirm commitment to sign up to all appropriate protocols to address perceived conflicts and governance concerns. Frasers firmly believes that these appointments are in the best interests of boohoo, all of its shareholders and all of its stakeholders.”
It pointed to Ashley’s “unrivalled retail expertise”, claiming: “boohoo’s board has even admitted in private that his background and experience would bring significant benefits for all shareholders.
“If boohoo shareholders vote for the resolutions… they will be appointing the UK’s leading retailer to the board. This opportunity may not come again.”
Frasers has created a website, boohoodeservesbetter.com, to showcase its campaign to solve what it terms a leadership crisis at boohoo.
Frasers said there are well-established legal protocols to manage existing and potential future conflicts of interest of individual directors.
It then accused boohoo of double standards, pointing to the appointment of Alistair McGeorge, a director and deputy chairman at boohoo, as chairman of Revolution Beauty – a company which counts boohoo as its largest shareholder.
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“boohoo put forward an unreasonable list of purported governance requirements that it wants from Frasers. These requirements are a massive overreach, with no basis in law, any rulebook or acceptable corporate practice,” Frasers added.
“None of the existing boohoo directors have signed up to any similar commitments, despite commercial interests in companies which compete with and/or have interests in boohoo. That Mr Kamani is supposedly willing to provide the same commitments is laughable.
“Many of the commitments of Mr. Kamani fall away with the agreement of the board, a board that in practice is in his grip.
“There is virtually no overlap between the two businesses. House of Fraser is the only one of Frasers’ brands that could be considered a retail competitor of one of boohoo’s brands, Debenhams. “However, Debenhams is an online marketplace with no bricks and mortar stores, unlike House of Fraser. House of Frasers represents a more upmarket brand offering than Debenhams’ current position in the market.
“Any crossover between the two businesses is tiny.”
Frasers also addressed concerns that it holds a minority interest in ASOS, which can be considered a direct competitor of boohoo.
“Frasers is not an insider of ASOS, it is only a shareholder, and Frasers only has access to the same information provided to any other shareholder.”
boohoo’s response this morning offered Frasers a place on the board – as long as this isn’t for Ashley or Lennon.
It added: “Frasers’ most recent letter makes it clear that when it comes to protecting minority shareholders, Frasers will decide which commitments it wishes to give and on what terms.
“This selective approach is consistent with the contents of Frasers’ letter to shareholders dated 21st November 2024 in which, in relation to the governance concerns that it claims it is now seeking to address, it dismissed these concerns by declaring: ‘Conflicts and competition? – Not an issue!’”
An independent proxy adviser recently warned shareholders at boohoo of the “obvious risks” presented by Frasers Group to the company.
Tim Morris, boohoo Group chair, said: “The board has consistently said that due to obvious conflict points and because of their historical ties to Frasers, Mike Ashley and Mike Lennon are not appropriate candidates to join the board in any circumstances, whatever commitments are offered.
“Notwithstanding that, Frasers continues to refuse to agree to a number of the key protections that the board would require should an appropriate representative be nominated. These are key issues which need to be addressed for the protection of all Shareholders and it is not for Frasers to pick and choose which commitments it will give.”
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