French Connection shares jump on bid talk

Struggling fashion chain French Connection’s shares on Monday soared after it admitted that it was mulling a “potential sale” of the company.

It emerged over the weekend that founder Stephen Marks, who set up the business in 1969, was looking to offload his stake.

The shares flew up 28.5%, or 12.2p, to 55p, valuing the business at £42.2 million. This is a boost for Mike Ashley’s Sports Direct, which has a 27% stake. The retail billionaire, who bought House of Fraser in August, was immediately linked to a potential deal. Sports Direct could not be reached for comment.

French Connection said: “The board confirms it is currently reviewing all strategic options to deliver maximum value for its shareholders, which includes the potential sale of the company.

“There can be no certainty that an offer will be made for the company, nor as to the terms on which any offer will be made.”

Marks is both chairman and chief executive, which has drawn criticism from investors in the past as it gave him too much control. The company had to appoint two new independent directors last year after facing pressure from shareholders. A deal to buy Marks’s stake would likely trigger an offer for the whole of French Connection under London Stock Exchange rules.

French Connection, which has been in the red for the past six years, sells brands Great Plain and YMC, and has almost 400 stores around the world, of which 130 are in Britain. It is best-known for its FCUK advertising slogan in 1997, which prompted the advertising watchdog to ask to see all its poster campaigns in advance.

The firm has faced increasing competition from the likes of Zara but is aiming to return to profitability in the present financial year. A takeover could lead to Marks’ retirement.