Mike Ashley-owned Frasers Group has increased its stake in online retail giant Asos to almost 9 per cent ahead of a potential battle for control of the business.

The news comes several days after reports emerged of a £1 billion takeover approach in late December from Turkish fashion retailer Trendyol, backed by China's Alibaba Group. Any talks with Trendyol are now on hold as the company’s native Turkey recovers from the worst earthquake in almost 85 years.

Asos has struggled in recent months as a result of changing consumer habits and supply chain issues. Prior to the initial takeover attempt in December its share stood at 643.50p, falling to 510.50p by the end of 2022. Its shares last Friday stood at 350.37p, down 78 per cent over the past 12 months. The company will drop out of the FTSE 250 index from 19 June having been demoted at the quarterly review last month.

This has led Ashley, who has built a reputation for acquiring struggling brands ranging from House of Fraser to Everlast, to build a sizable stake in Asos with a potential takeover on the cards should the fashion retailer look to facilitate a sale.

Frasers is now Asos’s third-largest shareholder after participating in an equity raise last month as part of a refinancing package to replace a £350 million loan which was due to be repaid by Asos last year. Frasers had reportedly attempted to acquire an additional five per cent of Asos in exchange for a closer trading relationship, but this was turned down with Asos instead opting to raise £75 million through other shareholder deals.

The latest share buy from Frasers has increased its stake in Asos from 7.4 per cent to 8.8 per cent for about £10 million – less than a month after Frasers's last stock purchase. Should Frasers’s stake develop to 10 per cent or above, it would have the power to block a statutory compulsory share purchase after any takeover offer, and would give the company a seat at the table in the event of any bid.

Also reportedly interested in Asos is Anders Povlsen, the owner of Denmark’s Bestseller and major shareholder in Germany’s Zalando. Povlsen, who is Scotland’s largest landowner, has a longstanding tiff with Frasers Group over the famous Jenners department store in Edinburgh which he also owns.

In comments to The Guardian, a spokesperson for Povlsen’s Heartland holding company said: “We are pleased to be a part of Asos and have also supported the equity placement, which reflects our confidence in Asos’ long-term prospects. This investment will undoubtedly provide a stronger foundation and more operational freedom for Asos’ management to execute their ambitions, strategies, and plans.”

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