-By Ankita Dutta.
Turkish fast fashion retailer Trendyol, which has been backed by China’s e-commerce giant Alibaba, is reportedly seeking to acquire UK-based online fashion retailer ASOS. The possible purchase price is estimated to be around £1 billion. While Trendyol has not yet entered into official negotiations with ASOS, reports suggest that it contacted the British firm in December with a prospective offer of between £10-12 per share.
Trendyol is said to be working on the potential ASOS bid alongside Morgan Stanley, a leading financial services company. Despite being a sizable player in the Turkish market with £2.6 billion in annual sales, Trendyol has struggled with profitability and lost money last year. However, it received a £285 million cash infusion from Alibaba and £1.2 billion in funding from investors such as SoftBank and Qatar Investment Authority in 2021.
News of Trendyol’s interest in ASOS comes on the heels of the British firm’s successful efforts to raise funds for its “Driving Change” initiative. ASOS recently secured £75 million through share placement and received an additional £275 million in long-term financing to propel its turnaround project, which is being led by CEO José Antonio Ramos Calamonte.
Driving Change is aimed at resetting the focus of the company from short-term growth to sustainable profitability.
Despite these efforts, ASOS posted pre-tax losses of £290.9 million in the six months ending on 28th February 2023, with revenues falling by 7 per cent year-on-year to £1.84 billion. The majority of the losses were due to the closure of the company’s headquarters and logistics infrastructure, which resulted in non-cash property impairment charges of £49.4 million and a £128.2 million write-off of shares.
The potential acquisition of ASOS by Trendyol could provide a new dimension to the online fashion retail landscape. Both companies are among the biggest players in the space in their respective countries, and the acquisition could help them expand their reach globally. However, any potential deal would have to clear regulatory hurdles in Europe, especially with regards to competition law.
In conclusion, while nothing is set in stone, Trendyol’s interest in acquiring ASOS provides an interesting story for the fast-changing world of e-commerce. It would be fascinating to watch how things turn out, given ASOS’s high profile within the fashion industry and Trendyol’s potential to shake things up with an ambitious acquisition.
