Luxury handbag maker Mulberry has rejected a takeover approach from Mike Ashley’s Frasers Group valuing the firm at £83 million. The struggling British fashion brand said it believes the possible offer from Frasers, which was revealed on Monday, “does not recognise the company’s substantial future potential value”.
Mulberry had discussions with its majority shareholder, Singapore-based Challice, controlled by billionaire Ong Beng Seng and his wife Christina, regarding the approach. The Somerset-based firm expressed confidence in its recently appointed chief executive Andrea Baldo to lead a turnaround and affirmed its commitment to planned capital raising efforts.
The company emphasised that the capital raising initiatives provide a strong foundation for executing a turnaround and delivering optimal value for all Mulberry shareholders. Mulberry also stated that Challice supports the company’s strategy and has shown no interest in endorsing the potential offer from Frasers.
Frasers Group, already owning 37% of Mulberry and owner of Sports Direct, proposed an approach worth 130p per share on Monday, valuing the stake in the company it does not currently own at £52.4 million. This offer comes as Mulberry reported a significant loss for the past year and declared the need to raise over £10 million.
Mulberry’s pre-tax loss for the year to March 31 was £34.1 million, a stark contrast to the £13.2 million profit recorded a year earlier. The company attributed the drop in sales to a decline in revenue over the spring and summer, with group revenues plummeting by 18% over the past 25 weeks due to reduced spending by affluent shoppers.
Expressing concerns over the long-term viability of Mulberry, Frasers Group cited worries about a potential Debenhams-style scenario. Frasers Group referenced the audit opinion in Mulberry’s latest annual report, which highlighted a “material uncertainty related to going concern”.
Mike Ashley, with past involvement in Debenhams, aims to prevent Mulberry from facing a similar fate. The company has reiterated its intent not to allow a situation where a viable business is forced into administration, as seen with Debenhams. Mulberry, established in Somerset in 1971 by Roger Saul, has notable celebrity patrons such as the Princess of Wales and Kate Moss.
With Mr Baldo now leading the company as CEO, following the departure of long-serving chief Thierry Andretta, Mulberry is striving to enhance its performance under new leadership. The brand’s rejection of Frasers Group’s takeover bid underscores its determination to navigate current challenges and pursue its strategic vision to unlock future growth opportunities.