Sharecast - The Times cited city sources as saying that Asos (LON:ASOS) received an approach from Turkish online retailer Trendyol in late December. The mooted deal would have valued Asos at between £10 and £12 a share.
The retailer’s shares closed at 350p on Friday after it was ejected from the FTSE 250. Leading credit insurers have also recently withdrawn or reduced cover for the retailer’s suppliers, a move that could further squeeze its cash flow.
It was understood that Trendyol has been working with advisers from Morgan Stanley (NYSE:MS). Neither party is under pressure to confirm discussions because there are no live talks. Asos and Trendyol declined to comment to The Times.
Last month, Asos was forced to shore up its finances by raising £75m from investors via a share placing. It also entered into £275m of new debt facilities at an average interest rate of 11%. The capital raise was supported by Anders Holch Povlsen, the Danish billionaire who is Asos’s largest shareholder with a 26% stake.
Billionaire retail tycoon Mike Ashley has built a 7.4% stake in Asos.
City sources told The Times that Trendyol also approached Povlsen about the potential Asos deal to see whether he would be interested in participating. Lise Kaae, chief executive of Heartland, Povlsen’s investment vehicle, told The Times: "Regarding rumours and speculations, we adhere to our practice of not commenting."
Leading credit insurer Allianz (ETR:ALVG) Trade withdrew cover entirely for Asos suppliers last week, citing adverse economic conditions and the retailer’s finances. Atradius, another leading insurer, is also understood to have reduced cover. The removal of credit insurance, which protects suppliers from the risk of a retailer being unable to pay its debts, can spur suppliers to demand payment upfront.
An Asos spokeswoman told The Times: "Credit insurance cover has been tightening across the industry. We have not seen any adverse impact on trading relationships with suppliers due to changes to cover."
At 0820 BST, the shares were up 7.5% at 372p.