Frasers’ takeover bid of ‘struggling fashion brand’ rejected

Mulberry has turned down a £52.4m offer from Frasers Group, which wanted to buy the remaining shares it doesn’t own in the struggling fashion brand.

Frasers, already holding 36.8% of Mulberry, made a cash offer of 130p per share on Monday, valuing the retailer at £83m, a 30% premium on its recent share price.

After consulting with advisers and talking with Challice, the majority shareholder with 56.1%, the board decided to reject the offer.

The board said it is confident in Mulberry’s future, pointing to new CEO Andrea Baldo and recent fundraising efforts as reasons for their decision.

The board concluded that “the possible offer does not recognise the company’s substantial future potential value.”

Challice also supports Mulberry’s current strategy and has expressed no interest in backing Frasers’ offer.

Despite rejecting the bid, Mulberry’s board acknowledged Frasers as an important investor and is open to further discussions about its participation in the company’s capital-raising efforts.

Frasers now has until October 28, 2024, to either make a formal offer under the takeover code rules or withdraw the proposal.

Frasers has criticised the Mulberry board after the firm issued a share issue late last week – something the Derbyshire firm said it would’ve been willing to underwrite entirely.

The company, which owns, Sports Direct, has accused Mulberry of a “total lack of engagement”.

A statement from Frasers said: “We have long been supportive of the brand and commercial opportunities available to the company.

“With our leading retail expertise and presence, and best-in-class distribution capability, we believe Frasers to be the best steward for returning Mulberry to profitability.

“As highlighted in the Subscription Announcement, the company is facing unabating difficulties as a standalone business. To name a few, rising costs, macroeconomic headwinds, and increased selectivity from its discretionary customer base.

“Frasers are exceptionally concerned by the audit opinion in the latest annual report released on Friday, 27 September 2024, which notes a “material uncertainty related to going concern”.

“As a 37% shareholder, Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration.”