Sports Direct has upped its stake in French Connection to 27 per cent, just months after it initially snapped up an 11 per cent stake in February.
The increase comes after Gatemore and OTK – activist investors who joined forces to wage a war on French Connection’s corporate governance – sold their shares to the Mike Ashley-owned retailer.
Gatemore held an eight per cent stake in French Connection, while OTK owned seven per cent.
The two now-former shareholders had called for French Connection boss Stephen Marks to either step down from one of dual roles as chief executive and chairman, or sell the business.
Independent investors have been vocal in their criticism of French Connection‘s state of the business over the past five years, with consecutive losses and Marks’ grip on the retailer.
READ MORE: French Connection boss given ultimatum to step down or sell up
Due to the pressure, French Connection sped up its store closure programme to halt its dwindling cash reserves and is in the process of finding new non-executives.
Despite this. Marks has not relinquished his dual role, which is seen as a blatant offence of UK corporate governance guidelines.
Gatemore told The Telegraph that it sold its stake in French Connection because it was not satisfied with the boardroom’s slow changes and that they “decided not to ride out the investment during this period of uncertainty in the UK retail market”.
Sports Direct’s 27 per cent stake means it now now holds 26 million shares in French Connection.
The latest increase means it brings Mike Ashley’s business closer to the UK 30 per cent threshold needed to launch a takeover.
Sports Direct has gained a reputation for buying stakes in rival retailers, as it did with JD Sports, House of Fraser, Agent Provocateur, Findel and most recently, Game Digital.
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