Frasers Group has proposed an £83m takeover of Mulberry, offering 130p per share.
- Frasers already holds 37% of Mulberry and aims to prevent another “Debenhams situation.”
- Mulberry faces financial difficulties, posting a £34m pre-tax loss and requiring a £10.75m capital raise.
- The takeover puts Frasers against major shareholder Challice, owned by Ong Beng Seng and Christina Ong.
- Mulberry’s CEO aims to stabilise operations amidst challenging market conditions.
Frasers Group, which already owns 37% of Mulberry, has put forward a bid of £83 million, equivalent to 130p per share. This proposal comes as a surprise, offering an 11% premium over the closing price of Mulberry’s stock on the previous Friday. Frasers positions itself as the suitable entity to return Mulberry to profitability, especially given its history of rescuing struggling British brands.
The proposed acquisition by Frasers is an attempt to avert circumstances similar to the 2019 collapse of Debenhams, from which it suffered significant financial losses. This strategic move pits Frasers against Challice, Mulberry’s principal shareholder, controlled by the wealthy Ong Beng Seng and his wife, Christina.
Mulberry has encountered a challenging financial year, reporting a substantial pre-tax loss of £34 million for the year ending March 2024, following a 4% decrease in sales to £153 million. To mitigate its precarious financial state, the company announced a £10.75 million capital raise, underwritten by Challice. However, auditors have expressed concerns over “material uncertainty” regarding Mulberry’s financial health.
Frasers has criticised Mulberry for its lack of communication with shareholders concerning the rights issue, describing the existing state of affairs as “untenable” for minority holders. Despite a brief recovery following the revelation of Frasers’ bid, Mulberry’s shares experienced a dip, reflecting wider challenges in the luxury sector caused by supply chain disruptions and reduced demand from markets such as China.
Under the leadership of new CEO Andrea Baldo, Mulberry is pursuing operational efficiency improvements and focusing on core markets in the UK. This leadership change marks a potential pivot from the discreet, long-term ownership style of the Ongs to a more assertive approach by Frasers, potentially influencing the brand’s exclusive standing. With upcoming financial results and external economic factors, Mulberry is at a crossroads, possibly facing a transformative acquisition.
This potential acquisition by Frasers Group signals a pivotal moment for Mulberry, potentially reshaping its future.
