Frasers Group has significantly increased its shareholding in Mulberry after its takeover bid was declined. The move comes as the Somerset-based fashion retailer faces challenging times.
- Frasers Group subscribed to 3.9 million new shares in Mulberry, raising its stake to 37.3%.
- Despite the increased stake, Frasers Group is not mandated to make a cash offer to other shareholders at this point.
- Challice Ltd, owned by Ong Beng Seng and family, remains the major shareholder with 56%.
- Mulberry contends that Frasers’ offer underestimated its potential, and is focusing on its turnaround strategy under CEO Andrea Baldo.
In the wake of having its takeover bid rejected, Frasers Group has decided to bolster its investment in the acclaimed British luxury brand Mulberry. The group, owned by Mike Ashley, subscribed to approximately 3.9 million shares at £1.00 per share. As a result, Frasers now holds a substantial 37.3% interest in the struggling fashion company.
This strategic move by Frasers Group does not necessitate a mandatory cash offer to remaining shareholders, alleviating immediate pressures of a full acquisition while potentially positioning their stake advantageously. The fashion house Mulberry, known for its heritage craftsmanship, finds itself amidst financial difficulties, as reflected in its recent financial performance of a £34.1 million pre-tax loss.
Amidst these financial strains, Challice Ltd, controlled by Singapore’s billionaire Ong Beng Seng, retains its dominant 56% share, continuing to be Mulberry’s largest shareholder. This presence constrains Frasers Group’s ability to consolidate control over the fashion retailer without further negotiations or market maneuvers.
Mulberry’s leadership firmly rejected the acquisition proposal, arguing that it did not adequately reflect the brand’s future potential and trajectory. The company is placing confidence in its newly appointed CEO, Andrea Baldo, to spearhead their turnaround efforts. It plans to proceed with its strategy for capital raising, which it asserts provides a foundation for delivering optimal shareholder value in the long term.
The retail environment poses significant challenges, with Mulberry attributing its financial slump to tightened consumer spending. As the company navigates through an officially recognized offer period, Frasers Group faces a deadline of October 28 to formalize any further acquisition intentions.
Frasers Group’s increased stake signals a strategic patience as Mulberry focuses on its recovery and investor value creation under new leadership.
