Hugo Boss has urged shareholders to throw out Mike Ashley’s £2.3bn takeover bid, with the German fashion giant’s board branding the Frasers Group offer “inadequate” and pitched at the lowest price the law allows.

The board said on Thursday that the €38 (£32.40) a share offer fails to reflect the company’s value and future potential, and recommended investors turn it down. The market appears to agree: Hugo Boss shares currently trade at €37.89 and have changed hands above the offer price in recent weeks.

The rejection is the latest twist in a saga that began when Frasers, which owns 26 per cent of Hugo Boss, launched a formal takeover offer last month. German takeover rules require any investor whose shareholding reaches 30 per cent to make an offer to all remaining shareholders.

Frasers has indicated that its offer was a legal formality required if it wanted to raise its investment, saying it was designed “to facilitate further investment by Frasers”. The group says it supports Hugo Boss’s existing management and would make no changes to the company were the offer accepted.

Hugo Boss took a similar view of the bid’s purpose, saying in its formal response that the offer was “primarily designed to enable Frasers Group to increase its shareholding”.

That did not soften the verdict on price. The bid, which Frasers said was final, was the lowest it could have made. It would see Frasers pay €2bn for the 74 per cent of Hugo Boss it does not own, valuing the company at €2.7bn.

Stephan Sturm, the company’s chairman, said: “Following a comprehensive and independent review, we have concluded that the offer price is financially inadequate and fails to appropriately reflect Hugo Boss’s value and future potential.”

He added: “We look forward to maintaining a constructive relationship with Frasers Group as single largest shareholder of Hugo Boss.”

For UK business owners and entrepreneurs, the episode is a masterclass in patient stakebuilding. Frasers has been investing in Hugo Boss since 2020, part of an “elevation strategy” that has carried the group from discount sportswear into luxury labels such as Gieves & Hawkes and Flannels, and more recently a stake in struggling sportswear brand Puma.

Mr Ashley owns 74 per cent of Frasers, formerly known as Sports Direct before a takeover of House of Fraser that saved the department store from collapse. The group also owns Evans Cycles and Jack Wills. Ashley stepped down from the Frasers board in 2022, handing the running of the business to his son-in-law Michael Murray, though the group’s appetite for dealmaking has hardly slackened since.

There are two lessons for smaller firms watching from the sidelines. First, a well-built minority stake buys influence long before it buys control; Frasers has spent six years earning its seat at the table in Metzingen. Second, anchoring an offer at the statutory minimum invites exactly this response. Bidding the least the law allows for a business whose shares trade above your price is rarely a recipe for enthusiasm.

Hugo Boss, which is promoted by David Beckham and Naomi Campbell, is Germany’s largest luxury label. Shares in Hugo Boss and Frasers were unchanged.

Investors have until 27 July to decide whether to accept the offer.