Frasers Group has decided not to proceed with its planned acquisition of the British luxury brand Mulberry.
- The decision follows weeks of speculation and strategic negotiations between the two companies.
- Concerns over Mulberry’s governance and financial position influenced Frasers Group’s decision.
- Mulberry had previously rejected Frasers Group’s offers, citing potential future value with new leadership.
- Majority shareholder Challice agreed with the rejection, noting it was an unsuitable time for the sale.
Frasers Group, the owner of Sports Direct and Flannels, announced on 23 October that it would not pursue its offer to acquire the British luxury accessories brand, Mulberry. This announcement concludes weeks of speculation surrounding the potential acquisition.
Frasers Group, which holds a 37% stake in Mulberry, expressed its dissatisfaction with Mulberry’s governance and leadership. The company criticised the absence of a commercial strategy amidst rising market challenges and Mulberry’s precarious financial position. Frasers Group voiced concerns about the confidentiality of the Board’s dealings with Challice, the majority shareholder, particularly regarding a critical £10 million emergency funding disclosed on 27 September.
The initial offer from Frasers Group was valued at £83 million, but Mulberry declined it on 1 October, highlighting the brand’s substantial future potential under new leadership and disinterest from Challice, which holds a 56.4% stake. Following this, Frasers Group increased its cash offer to £111 million on 11 October. However, Challice maintained its stance, stipulating that it was an inopportune moment for Mulberry to be sold.
On 22 October, Mulberry issued an update reiterating its rejection of Frasers Group’s proposal, aligning with Challice’s view that the potential acquisition posed distractions for the company and its management. Frasers Group expressed hopes for a more collaborative relationship with Mulberry’s Board, potentially through appointing a representative from Frasers Group, a request they have previously made.
The decision by Frasers Group to halt the acquisition reflects the complexities and differing perspectives in the luxury brand’s strategic direction.
