Mulberry has declined an £83 million acquisition proposal from Frasers Group.
- Mulberry consulted major shareholder, Challice, before rejecting the offer.
- Mulberry showed confidence in new CEO Andrea Baldo for future success.
- The rejection led to a 4.8% rise in Mulberry’s share prices.
- Frasers criticized the timing of Mulberry’s rights issue and seeks further engagement.
Mulberry has decisively rejected an £83 million takeover offer from Frasers Group, following consultations with its major shareholder, Challice. Challice, which is controlled by Malaysian billionaire Ong Beng Seng and his wife Christina, owns 56.1% of the company. This strategic move reflects Mulberry’s belief in the promising leadership of their recently appointed CEO, Andrea Baldo. The company has expressed confidence that Baldo will provide a ‘solid platform’ necessary for a turnaround that optimizes shareholder value.
Following the rejection, Mulberry’s shares experienced a notable increase of 4.8%, climbing to 130p. The bid from Frasers Group, made after a surprise £10 million rights issue, offered 130p per share, representing an 11% premium over the previous closing price. Frasers Group, which owns Sports Direct, claims their stewardship is the best path to restore the leather goods brand to profitability. They have, however, expressed concerns regarding Mulberry’s financial difficulties, particularly emphasizing a warning from Mulberry’s auditor about ‘material uncertainty’ over the company’s continued operations.
Frasers Group has also criticized the timing of Mulberry’s rights issue announcement, which they described as ‘untenable’ and problematic for both minority shareholders and themselves. Despite having until October 28 to either solidify their offer or withdraw, Frasers has shown dissatisfaction with the current engagement levels. Should they choose to withdraw, Frasers would face a six-month restriction period, preventing them from making another bid unless an alternative offer surfaces from a different entity.
Despite reporting a £34 million pre-tax loss, Mulberry seems determined to stabilize its financial standing with the new funds to support CEO Baldo’s strategy. This optimism clearly resonates with the market, as demonstrated by the appreciation in share price. It remains to be seen how Frasers Group will adjust their approach or if they will abandon their acquisition attempt altogether.
The unfolding circumstances leave Mulberry poised for potential growth while Frasers Group deliberates its next move.
