Frasers Group makes a bold move, offering £83 million for Mulberry, aiming to restore the brand’s profitability amid financial instability.
- The bid offers a premium of 130p per share, positioning Frasers as a potential rescuer of the iconic British brand.
- Mulberry’s financial predicament includes a significant pre-tax loss and an urgent need for capital, escalating the takeover tensions.
- Frasers already holds a significant stake in Mulberry, but the majority shareholder, Challice, may resist the takeover attempt.
- Luxury brands, including Mulberry, face challenging market conditions, further complicating the potential acquisition.
Frasers Group has launched an unexpected £83 million takeover bid for the luxury handbag brand Mulberry, highlighting its intent to restore the company’s financial performance. The offer price stands at 130p per share, representing an 11% premium over the last closing price before the bid’s announcement. Frasers positions itself as the optimal caretaker for Mulberry, proposing a strategy to return the brand to profitability.
Currently holding a 37% stake in Mulberry, Frasers is no stranger to stepping in as a savior of British retail brands. This move aligns with the company’s historical aspiration to prevent scenarios like the demise of Debenhams in 2019, where Frasers incurred substantial financial losses.
The takeover attempt by Frasers sets up a potential conflict with Challice, the controlling majority shareholder in Mulberry, owned by billionaire couple Ong Beng Seng and Christina Ong. Notably, Mulberry’s recent financial distress has necessitated a £10.75 million capital raise, backed by Challice, to stabilize its precarious financial situation.
Mulberry, headquartered in Bath, disclosed a troubling £34 million pre-tax loss for the fiscal year concluding in March 2024. This downturn, alongside a 4% reduction in sales to £153 million, has raised urgent concerns about the company’s fiscal health. Auditor assessments further emphasize the material uncertainty surrounding Mulberry’s viability, casting doubts on its operational future.
Frasers’ criticism of Mulberry’s inadequate shareholder engagement regarding the recent rights issue underscores the urgency of the proposed takeover. Share prices had recently dipped to about 100p, rebounding slightly to 124p following the bid announcement. These economic pressures are compounded by global luxury market challenges, exacerbated by supply chain disruptions and diminished demand in China.
Mulberry’s new CEO, Andrea Baldo, appointed in July, is tasked with steering the company towards stability through enhanced operational efficiency and a focused approach on UK markets. The shift in leadership corresponds with Frasers’ aggressive acquisition strategy, which could pivot Mulberry’s direction from the Ong family’s traditional management style toward a broader market reach under Mike Ashley’s helm.
As Mulberry navigates its challenging financial landscape, the proposed acquisition by Frasers could lead to significant transformations, potentially altering the brand’s market positioning and operational dynamics.
The Frasers Group’s takeover bid represents a decisive moment for Mulberry, amid global luxury market challenges and internal financial pressures.
