Mike Ashley’s Frasers Group has submitted an £83m offer to acquire the remaining shares of Mulberry, following allegations of exclusion from a recent £10m capital raise.
The proposal highlights Frasers Group’s belief in its capacity to restore Mulberry’s profitability amid ongoing financial challenges.
The backdrop to this bid involves significant financial difficulties for Mulberry. The company reported a pre-tax loss of £34.1m, a stark contrast to the £13.2m pre-tax profit achieved the previous year.
UK retail sales have also dropped to £84.7m from £87.7m in 2023, reflecting changes in consumer spending habits amidst macroeconomic uncertainties and inflation. Global retail revenue declined by 14%, with Asian sales plummeting by 29% year-on-year.
Frasers Group attributes Mulberry’s ongoing difficulties as a key motivator for their indicative takeover bid. They believe their retail expertise and superior distribution capabilities position them as the ideal managers to return Mulberry to profitability. Mike Ashley’s consortium stated, “We will not accept another Debenhams situation where a perfectly viable business is run into administration.”
Frasers Group sees an opportunity to leverage its resources to stabilise Mulberry and drive a return to financial health. The group firmly believes they can address the challenges Mulberry is facing.
Following the announcement of Frasers Group’s bid, Mulberry’s shares saw a decline of over 12% during early trading sessions. This reaction signifies market concerns about the luxury brand’s current state and its prospects under new management.
Mulberry has acknowledged the challenging macroeconomic environment and expressed limited optimism for short-term improvements. Their strategy focuses on protecting margins and progressing towards being a global, sustainable luxury brand.
Frasers Group is under a tight timeline to make a final decision on their offer. They have until 5pm on 28 October to either formalise their bid or withdraw it.
This period will be critical for both Frasers Group and Mulberry, as they navigate shareholder interests, market reactions, and strategic planning for the future.
The outcome of this bid could significantly reshape the landscape for both companies. For Frasers Group, acquiring Mulberry could enhance their portfolio and market presence in the luxury sector.
Conversely, for Mulberry, joining forces with Frasers Group could provide the necessary support to navigate its financial turmoil and pursue long-term strategic goals.
The £83m bid by Frasers Group for Mulberry marks a pivotal moment for both entities, with potential significant impacts on the luxury retail landscape.
Stakeholders will be closely watching the developments until the deadline of 28 October, as the strategic decisions made now could define the future trajectory of Mulberry.
