Frasers Group has made a significant financial move against luxury retailer Mulberry, proposing an £83m takeover.
- The luxury firm announced plans to raise funds totalling £10m, divulged mere hours before public disclosure.
- Frasers Group, a major shareholder, criticised the lack of communication from Mulberry regarding this fundraising effort.
- Frasers’ proposed offer is notably 30% higher than Mulberry’s retail subscription price.
- Concerns about Mulberry’s financial health stemmed from its latest audit report indicating potential instability.
Frasers Group has initiated an £83 million takeover bid for luxury brand Mulberry, which has been struggling financially. The group, controlled by Mike Ashley, already holds a 37% stake in Mulberry.
The move comes in response to Mulberry’s recent announcement to raise £10 million. The company planned this through issuing new ordinary shares and a retail offer up to £750,000, a decision Frasers claims was not adequately communicated to them until just before its public announcement.
Frasers has offered 130p per share, representing a 30% premium over the 100p subscription price proposed by Mulberry. Furthermore, this offer is 11% higher than the company’s closing share price of 118p.
Mulberry’s share price experienced a rise from 115p to 128p following the announcement of Frasers’ offer, reflecting market interest in the proposal.
Mulberry’s latest financial results, released shortly before, revealed a troubling downturn. The company reported a pre-tax loss of £34.1 million, contrasting with a previous year’s profit of £13.2 million, and a 4% fall in group revenue to £152.8 million due to a challenging market environment.
Frasers has voiced its concern over the company’s financial situation, highlighting a ‘material uncertainty related to going concern’ from the latest audit report. The statement explicitly indicates their unwillingness to encounter another situation akin to the retail chain, Debenhams, implying apprehension about potential mismanagement.
By severely criticising Mulberry’s ‘total lack of engagement’ and underscoring the critical nature of the situation, Frasers presents this takeover bid as a necessary intervention to prevent further financial decline.
Frasers Group’s £83m takeover attempt reflects its strategic interest in safeguarding Mulberry’s future amidst financial distress.
