Mulberry has declined an £83 million bid from Frasers Group, deeming it unsatisfactory.
- The brand’s decision reflects confidence in CEO Andrea Baldo’s new leadership strategy.
- Mulberry’s stock increased by 4.8% following its rejection of the offer.
- Frasers Group criticised the timing of Mulberry’s recent rights issue, finding it problematic.
- Frasers has until 28 October to formalise its proposal or withdraw permanently.
Mulberry has turned down a substantial acquisition proposal from the Frasers Group, pegged at £83 million. The luxury brand communicated this decision after consulting with its primary stakeholder, Challice, which owns a majority of the company shares. Challice is controlled by Malaysian billionaire Ong Beng Seng and his spouse, Christina.
This move underlines Mulberry’s faith in its strategic direction, particularly under the guidance of newly appointed CEO Andrea Baldo. The brand expressed certainty that Baldo’s leadership would provide a ‘solid platform’ for a turnaround, optimising shareholder value. As a result of this declaration, Mulberry observed a notable rise in its share price, which climbed by 4.8% to 130p.
Frasers Group, after proposing a 130p-per-share offer, has yet to make further comments. This offer came shortly after an unexpected £10 million rights issue by Mulberry, a factor Frasers finds contentious. The bid reportedly represents an 11% premium over Mulberry’s last closing price before the offer.
The owner of Sports Direct, Frasers Group, expressed the belief that it could significantly enhance Mulberry’s financial health. It pointed to existing financial concerns, highlighted in a warning from Mulberry’s auditor regarding ‘material uncertainty’ about the company’s ongoing viability. Frasers voiced dissatisfaction with the lack of engagement from Mulberry concerning the timing of the rights issue, calling the situation ‘untenable’ for Frasers and other minority stakeholders.
Despite reporting a pre-tax loss of £34 million recently, Mulberry is optimistic about leveraging the newly raised capital to strengthen its financial base. This will facilitate CEO Baldo in implementing his envisioned strategies for the company’s future.
According to UK takeover regulations, Frasers Group must decide by 5pm on 28 October whether to proceed with a formal bid or withdraw. Should Frasers choose not to pursue the offer, it cannot initiate another takeover attempt for a period of six months unless a rival bidder emerges.
Mulberry’s rejection of the takeover bid underscores its confidence in its strategic direction and leadership.
