Frasers Group has proposed an £83 million takeover plan for Mulberry, amid financial difficulties faced by the luxury brand. The offer comes with a series of strategic intentions aimed at revitalizing Mulberry’s position in the luxury market.
- Frasers Group, known for its ownership of Flannels and House of Fraser, holds a 37% stake in Mulberry and sees this acquisition as a way to save British brands.
- The offer, which values Mulberry shares at 130p per share, stands 11% above their recent closing price.
- Mulberry faces significant financial pressure, evidenced by a £34 million pre-tax loss and the need for a £10.75 million capital raise.
- The potential takeover could shift Mulberry’s ownership from the discreet approach of Ong Beng Seng’s family to Mike Ashley’s ambitious strategy.
Frasers Group, already owning 37% of Mulberry, has launched an £83 million takeover bid. The offer values Mulberry shares at 130p each, an 11% premium on their last closing price. Frasers has positioned itself as the ideal entity to return Mulberry to profitability, emphasizing its role as a rescuer of British brands. The group is determined to avoid a repeat of the Debenhams collapse which resulted in a substantial financial setback.
Mulberry, noted for its renowned Bayswater handbags, has been grappling with financial adversity. The company reported a £34 million pre-tax loss for the fiscal year ending March 2024. A decrease in sales by 4% to £153 million exacerbated these issues, alongside challenges in the luxury market influenced by supply chain disruptions and weaker demand from China. The financial instability is highlighted by auditor warnings about ‘material uncertainty’ in its recent annual report.
Frasers’ bold move sets up a clash with Challice, the majority shareholder in Mulberry, controlled by Ong Beng Seng and his wife, Christina. Approximately £10.75 million is required to stabilize Mulberry’s finances, a need that Challice has underwritten, seeking to support the company’s balance in challenging economic times.
Mulberry’s stock price, having dipped to around 100p, showed minor recovery following Frasers’ proposition, closing at 124p. Frasers criticized Mulberry for limited communication with minority shareholders concerning their recent rights issue, terming the existing scenario as ‘untenable’ for non-majority stakeholders.
This proposed acquisition could mark a departure from Ong’s longstanding, understated management style in favor of Ashley’s aggressive expansion approach, potentially reaching mainstream channels. Mulberry stands on the brink of a takeover contest that could redefine its market footprint and strategic direction, as observed against a backdrop of transformative shifts in the luxury sector.
Frasers Group’s ambitious bid marks a turning point for Mulberry, potentially redefining its path in the evolving luxury market.
