The Frasers Group’s bid to acquire Mulberry has stirred up the fashion industry.
- Mulberry rejected Frasers’ £83m offer, citing future potential.
- Frasers Group criticises Mulberry for lack of transparency.
- Mulberry’s financial struggles trigger Frasers’ strategic move.
- UK takeover rules put pressure on Frasers for a decisive action.
The Frasers Group’s bold move to acquire Mulberry has created ripples within the fashion sector. The offer, intended to prevent what they called “another Debenhams situation,” was swiftly rejected by Mulberry, which argued that the bid “does not recognise the company’s substantial future potential value.” Despite this setback, Frasers, led by Mike Ashley, shows no sign of relenting.
Mulberry is backed by Challice, its majority shareholder, which holds a 56.1% stake compared to Frasers’ 36.8%. Challice has thrown its support behind Mulberry’s turnaround strategy under the helm of its new CEO, Andrea Baldo, expressing no interest in the proposed acquisition. This backing serves as a significant block to Frasers’ attempts.
Frasers first invested in Mulberry in February 2020, emphasising its strategy of strengthening relationships with premium brands. Initially ruling out a takeover, circumstances shifted with Mulberry’s recent financial woes. The brand posted a pre-tax loss of £34.1 million, starkly contrasting its previous profit, and sales plummeted by 18% over 25 weeks of the financial year.
Frasers’ concerns about transparency have mounted. Discontent with Mulberry’s decision to raise over £10 million without prior notification escalated tensions, as Frasers saw it as a lack of engagement. Their commitment as long-term investors was undermined, fuelling their determination to steer Mulberry back to profitability.
Frasers argues that it is well-equipped to revitalise Mulberry, citing its retail expertise and broad distribution network. Recent successes in luxury retail with the Flannels brand back this claim, although doubts persist due to their previous struggles with other luxury acquisitions like Matches Fashion.
Under current UK takeover rules, Frasers now faces an imminent deadline of 28 October to formalise its offer. However, with Challice’s firm stance and control over a majority of shares, Frasers’ chances appear tenuous. Retail analysts express scepticism about Frasers’ prospects, though the saga is yet to unfold completely.
The ongoing battle for Mulberry exemplifies the high stakes and strategic manoeuvres in the luxury retail sector.
