Frasers Group has mounted a strategic bid for luxury retailer Mulberry amid financial uncertainties.
- Holding a 37% share, Frasers expresses concerns over Mulberry’s financial strategy and transparency.
- Mulberry’s recent financial performance includes a significant loss and a drop in sales by 18%.
- Frasers’ bid offers a 30% premium over Mulberry’s retail offer, valuing the company at £83 million.
- Auditors highlight ‘material uncertainty’ regarding Mulberry’s future as a going concern.
Frasers Group has taken decisive action by proposing a strategic bid for the luxury fashion brand Mulberry, igniting concerns over the latter’s financial transparency and stability. As a major shareholder, possessing 37% of Mulberry’s equity, Frasers Group expressed unease about not being informed of Mulberry’s recent decision to seek additional funding, unveiled during an unexpected announcement on Friday. Mulberry’s auditors raised alarms with a report indicating ‘material uncertainty related to going concern’, a significant factor prompting Frasers’ response.
Frasers has categorically stated its unwillingness to witness Mulberry experience a fate similar to Debenhams, where a viable business was driven into administration. In an effort to steer Mulberry’s financial trajectory back to stability, Frasers has extended a cash offer at 130 pence per share, translating to a valuation of £83 million for Mulberry. This offer represents a remarkable 30% premium over Mulberry’s retail offering price of 100 pence and stands 11% above the closing share price noted on Friday, 27 September.
The fiscal revelations don’t end there for Mulberry, as it reported a shift to a loss in the latest financial cycle, coupled with an 18% reduction in group sales. These developments signal a downturn within the luxury sector, which Mulberry cites as a contributing factor to its current plight. Further complicating the situation, Frasers indicated it was only made aware of Mulberry’s fundraising initiative shortly before its public disclosure. Frasers has emphasized its commitment, noting willingness to underwrite the subscription entirely, potentially on more favourable terms than those laid out by Mulberry.
Faced with a ‘non-binding indicative offer’ from Frasers earlier, Mulberry provided a response deemed ‘wholly unsatisfactory’ by Frasers, prompting the latter to proceed with its cash offer. Frasers has articulated its supportive stance towards Mulberry, underlining its potential and the commercial opportunities available. Despite facing various operational challenges like rising costs and macro-economic fluctuations, Frasers emphasises its capability to lead Mulberry back to profitability thanks to its extensive retail expertise and distribution acumen.
Frasers Group’s strategic manoeuvre underscores its commitment to Mulberry amid ongoing financial uncertainties, aiming to restore stability and growth.
