Shares in British online fashion retailer ASOS (ASOS.L), which have fallen sharply in recent months after profit warnings and a warehouse fire, jumped on Wednesday on an unconfirmed report of a U.S. bid for a stake in the business.
ASOS shares, a previous market darling that have fallen by almost two thirds this year, surged 13.5 percent to 26.65 pounds, pulling up other online fashion stocks in their wake, including Boohoo (BOOH.L) and Italy's Yoox (YOOX.MI). ASOS shares had already risen 7.6 percent on Tuesday on the speculation.
British financial website This Is Money said there was "vague talk" of a U.S. cash bid in the region of 50 pounds ($83) a share, adding that a U.S. buyer was believed to have approached 27.4 percent shareholder Bestseller, a Danish fashion business that also holds a stake in German rival Zalando.
Among companies the website said were interested were e-commerce giants eBay(EBAY.O) and Amazon (AMZN.O), which are believed to be keen to expand into fashion, one of the fastest growing areas for e-commerce.
ASOS declined to comment.
The company, popular with internet-savvy twenty somethings as well as celebrity fans such as America's First Lady Michelle Obama and British singer Rita Ora, has had a meteoric rise since it listed on the stock market at only 20 pence in 2001.
It now sells more than 75,000 branded and own-brand products ordered on nine local language websites, including in Russia and China, shipping the goods around the world from a British hub. The websites attracting a total of 83 million visits a month.
POOR FIT?
Jefferies analyst David Reynolds said the takeover talk came as no surprise, given that U.S. companies are generating international revenue that they might not want to repatriate home because of taxation issues.
But Reynolds said he did not think that the "young, edgy" ASOS brand would be a good fit for either eBay or Amazon.
"It just seems improbable. I think it's a cheap stock but I think the prospect of a genuine M&A inbound offer coming from the United States from Amazon or eBay is low," he said.
One trader dismissed the idea of a takeover, saying there is more concern in the market over the potential for another profit warning when ASOS reports quarterly figures on Sept. 16.
Another trader said the high interest in short positions in the stock explained size of the share price move. Short-sellers borrow a stock and sell it, betting they will be able to buy it back at a lower price and pocket the difference, so any sharp rise in the stock will prompt them to rush to cover their positions, amplifying the upward momentum.
Of all outstanding shares in Asos, 6 percent are out on loan - three times the market average.
ASOS shares fell sharply in June after a fire at its Barnsley distribution centre in northern England and a warning that full-year profits would miss forecasts, the latter wiping 1.2 billion pounds off its market value in a day.
ASOS had already spooked investors in March when it announced plans to spend on infrastructure to meet future demand, at the expense of short-term profits.
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