Frasers Group has initiated a takeover bid for Mulberry, citing dissatisfaction with the luxury retailer’s financial transparency.
- The retail giant values Mulberry at £83 million, offering a cash payment of 130p per share, a notable premium over the current market rate.
- Concerns arise as Mulberry auditors highlight potential financial instability, with Frasers aiming to prevent another ‘Debenhams situation’.
- Frasers, holding a 37% stake, criticises Mulberry for excluding them from fundraising discussions, indicating potential for better negotiation terms.
- The strategic move by Frasers underscores their commitment to revitalising Mulberry amidst economic challenges and industry headwinds.
Frasers Group, known for its significant stake in Mulberry, has made a strategic move by proposing a takeover bid. This comes after expressing dissatisfaction with Mulberry’s lack of transparency regarding its financial strategies, particularly its sudden announcement to raise additional funds. Frasers’ offer values Mulberry at £83 million, paying a cash price of 130p per share, which stands at a 30% premium over the recent 100p share subscription price and 11% higher than the firm’s closing share price just before the offer.
Central to Frasers’ concerns is a recent audit report that highlights a ‘material uncertainty related to going concern.’ This financial instability has drawn parallels to the Debenhams scenario, where Frasers fears a repeat of a viable business collapsing into administration. As a proactive measure, Frasers asserts its role as a long-term investor dedicated to steering Mulberry towards profitability through its retail expertise and distribution capabilities.
Mulberry’s financial struggles have been evident, with the company reporting an 18% decline in sales amidst a challenging luxury market landscape. Despite this downturn, Frasers claims it was not informed about Mulberry’s plan to generate over £10 million in cash until just before the public announcement, a move they argue deprived them of the opportunity to underwrite the subscription on possibly more favourable terms.
Frasers had put forward a ‘non-binding indicative offer’ for the remaining shares over the weekend, but the response from Mulberry was deemed ‘wholly unsatisfactory.’ Consequently, Frasers has advanced a definitive cash offer to acquire the business. They have stated their intent to leverage their extensive retail knowledge and resources to overcome the economic and market challenges currently plaguing Mulberry.
Frasers Group’s decisive bid for Mulberry highlights its strategic resolve to safeguard and revitalise a valued luxury brand amidst ongoing uncertainties.
