Frasers Group Challenges Mulberry in Strategic Move Against Luxury Market

Frasers Group has put forward a bid for the struggling luxury brand Mulberry, chastising the company for not revealing its plans to seek further funding.

Led by Mike Ashley, Frasers, which owns a 37% stake in Mulberry, expressed its deep concern after the retailer’s auditors mentioned “material uncertainty related to going concern” last Friday. The group stated that it would “not tolerate another Debenhams scenario where a viable business faces administration.”

Frasers has made a cash offer of 130p per share, which values Mulberry at £83 million. This bid represents a 30% premium over the £1.00 subscription price for the brand’s retail offering and an 11% increase from the closing share price on Friday (September 27).

On the same day, Mulberry announced efforts to raise over £10 million in cash while revealing a loss for its latest financial year. The company also noted an 18% decline in group sales year-to-date, attributing this downturn to a slowdown in the luxury market.

Frasers asserted that it was only made aware of Mulberry’s fundraising initiative just “before its announcement” on Friday.

The company remarked: “As a committed, long-term investor in Mulberry, Frasers would have been open to fully underwriting the subscription, potentially providing better terms for the business. Given the complete lack of communication, we view the current arrangement as untenable for Frasers and other minority shareholders in Mulberry.”

Over the weekend, Frasers submitted a “non-binding indicative offer” for the shares it does not already possess. However, after receiving a “holding response” the following day, it considered this reply “wholly unsatisfactory.” Consequently, the group has proceeded with a cash offer for the entire company.

Frasers Group stated: “We have always been supportive of the brand and the commercial opportunities it presents. With our extensive retail experience and strong distribution capabilities, we believe Frasers is the most appropriate partner to assist Mulberry in returning to profitability.”

“The company is facing persistent challenges, including rising costs, macroeconomic pressures, and increased selectivity from its discretionary customer base. Frasers is extremely troubled by the audit opinion in the most recent annual report issued on Friday, September 27, 2024, which underscores a “material uncertainty related to going concern.”

“As a shareholder with a 37% stake, Frasers will not allow another Debenhams situation to occur, where a viable business is forced into administration.”

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