Frasers Group, led by Mike Ashley, proposes an £83m acquisition of Mulberry, voicing concerns over the retailer’s financial engagement. This strategic move comes after Mulberry’s announcement to raise £10m, which was made public without informing Frasers, a significant shareholder. The situation highlights Frasers’ commitment to preventing another ‘Debenhams scenario’ with Mulberry’s recent financial struggles, including a recent pre-tax loss.
Frasers Group has put forward a substantial bid of £83m to acquire Mulberry, a luxury fashion firm. This move is seen as an assertive step by Mike Ashley’s group in response to Mulberry’s announcement of raising £10m without prior consultation with its significant stakeholders, including Frasers, who currently hold 37% of Mulberry shares.
On Friday, Mulberry revealed its intention to generate funds through the issuance of new ordinary shares and a retail offer amounting up to £750,000. This announcement was met with criticism from Frasers Group, highlighting a ‘total lack of engagement’ with major shareholders about the financial strategy, which they learned of only shortly before it was publicly revealed.
Frasers’ offer of 130p per share reflects a 30% premium on Mulberry’s 100p retail offer subscription price and an 11% increase compared to its closing share price of 118p on the day of the announcement. This demonstrates Frasers’ confidence in Mulberry’s potential despite its fiscal challenges.
The financial outlook for Mulberry has been concerning, with the company reporting a pre-tax loss of £34.1m, a significant drop from the £13.2m profit the previous year. Revenue also experienced a downturn, falling by 4% year on year to £152.8m, largely due to a tough second half.
Frasers Group expressed their alarm over the audit opinion in Mulberry’s recent annual report, which indicated a ‘material uncertainty related to going concern.’ As stakeholders, they are determined to avert a repeat of the Debenhams situation, where a viable business was pushed into administration, through proactive acquisition measures.
Frasers Group’s offer underscores its strategic intent to stabilize Mulberry while prioritizing shareholder engagement and financial viability.
