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Mulberry has rejected a conditional bid from Mike Ashley’s Frasers Group, saying the offer does not recognise the UK luxury brand’s “substantial future potential value”.
Frasers, which owns about 36.8 per cent of the shares, offered 130p a share, a premium of 11 per cent to the closing price on Friday, valuing the struggling brand at £83mn.
Mulberry, renowned for its leather handbags, said on Tuesday that the board and its long-term majority shareholder, the Singapore-based Ong family that holds a 56 per cent stake, believed it could turn itself round after appointing new chief executive Andrea Baldo in July.
It is also in the process of raising almost £11mn from existing shareholders to shore up its balance sheet, with the aim of creating a solid platform for recovery that would be better for shareholders.
“In light of this, the board has concluded that the possible offer does not recognise the company’s substantial future potential value,” the group said.
It said Challice, controlled by billionaire Ong Beng Seng and his wife Christina, was “supportive of the company’s strategy and has no interest in supporting the possible offer”.
Frasers’ possible bid for the shares it does not own would need the Ong’s blessing. On Monday, Frasers claimed it was blindsided by Mulberry’s rights offer, announced after the market closed on Friday, and said it believed Frasers was “the best steward” to return the leather goods maker to profitability.
Mulberry announced on Friday an annual pre-tax loss of £34mn, from a £13mn profit the previous year, on a 4 per cent drop in revenue to £153mn.
The Aim-listed company said it “looks forward to engaging further with Frasers regarding a pro rata participation in the subscription” after the retail conglomerate, which also has a stake in Hugo Boss and owns upmarket department store chain Flannels, said it would have been willing to fund the cash raise on potentially better terms.
Frasers added on Monday that as an existing shareholder it would “not accept another Debenhams situation where a perfectly viable business is run into administration” after Mulberry noted a “material uncertainty related to going concern” in its annual report.
Debenhams went into administration in 2020 having rejected a last-ditch rescue plan by Frasers, which was then called Sports Direct and a shareholder, as part of an acrimonious battle with Debenhams’ board for control of the business.
Frasers has until October 28 to either make a formal offer or walk away. In 2020 it bought a stake in Mulberry, which is a significant supplier to House of Fraser, the department store group also owned by Frasers following its collapse in 2018.
