Frasers group launches £83m takeover bid for mulberry amid financial struggles

Mike Ashley’s Frasers Group has made an £83 million takeover bid for Mulberry, one of the UK’s most iconic luxury brands, after being blindsided by a £10 million emergency share offer from the struggling leather goods maker.

The surprise bid offers 130p per share, representing an 11% premium on Friday’s closing price, with Frasers asserting that it is “the best steward” to return Mulberry to profitability.

Frasers, which owns Flannels and House of Fraser, already holds a 37% stake in Mulberry and has positioned itself as a rescuer of British brands. The company aims to avoid another “Debenhams situation,” referring to the collapse of the department store chain in 2019, which led to Frasers losing its £300 million stake. The takeover attempt will now set Frasers against Challice, Mulberry’s majority shareholder, which is controlled by the billionaire Ong Beng Seng and his wife, Christina.

Mulberry recently announced that it needed an urgent £10.75 million capital raise, underwritten by Challice, to shore up its balance sheet after a difficult year. The Bath-based business, known for its iconic Bayswater handbags, posted a £34 million pre-tax loss for the year ending in March 2024, after a 4% drop in sales to £153 million. The company’s auditor also flagged “material uncertainty” around Mulberry’s financial health in its latest annual report.

Frasers criticised Mulberry’s lack of engagement with shareholders over the rights issue, calling the status quo “untenable” for minority holders. Mulberry’s shares had slumped to around 100p on Monday before recovering slightly after the Frasers offer was revealed, closing at 124p.

Luxury brands globally have been hit by tough market conditions, with Mulberry’s sales further impacted by supply chain disruptions and weaker demand in China. Mulberry’s new CEO, Andrea Baldo, who joined in July after his predecessor Thierry Andretta was ousted, has pledged to stabilise the business by improving operational efficiency and targeting core UK markets.

Frasers’ bid marks a significant moment for Mulberry as it could see a shift from Ong’s long-term, discreet ownership style to Ashley’s more aggressive, high-profile approach. While the Ong family has carefully maintained Mulberry’s luxury status since 2003, Frasers’ acquisition could lead to expansion into more mainstream channels, raising questions about how the brand’s exclusivity would be preserved under Ashley’s ownership.

As the luxury market continues to evolve, Mulberry finds itself on the verge of a potential takeover battle that could reshape its future. The group’s financial results for the third quarter are expected on October 30, the same day as the UK government’s budget announcement.

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Frasers group launches £83m takeover bid for mulberry amid financial struggles