The board of Mulberry has decisively turned down an £83 million takeover offer from Frasers Group, signalling confidence in its current strategic path.
This rejection comes as Mulberry navigates significant financial hurdles, placing their trust in newly appointed CEO Andrea Baldo to spearhead a turnaround for the struggling brand.
Introduction
The board of Mulberry has decisively turned down an £83 million takeover offer from Frasers Group, signalling confidence in its current strategic path.
This rejection comes as Mulberry navigates significant financial hurdles, placing their trust in newly appointed CEO Andrea Baldo to spearhead a turnaround for the struggling brand.
Board’s Stance and Shareholder Consultation
Mulberry’s board, following extensive discussions with its majority shareholder, Challice, has resolved to reject the takeover bid. Challice, controlling 56.1% of the company, is under the ownership of Malaysian billionaire Ong Beng Seng and his wife, Christina.
In an official stock exchange announcement, Mulberry emphasised its faith in CEO Andrea Baldo. The board believes Baldo’s leadership offers a solid foundation for a comprehensive recovery strategy aimed at maximizing shareholder value.
Market Reactions and Financial Performance
Following the announcement of the takeover bid rejection, Mulberry’s shares experienced a notable increase of 4.8%, bringing the price to 130p per share.
Frasers Group, which presented a 130p-per-share bid, has not yet issued a response. This proposal included an 11% premium over the previous closing price, highlighting Frasers’ intent to revitalise Mulberry’s fortunes.
The leather goods company recently reported a concerning £34 million pre-tax loss, underlining the severity of its financial difficulties. This loss prompted a £10 million rights issue aimed at stabilising the company’s balance sheet.
Frasers Group’s Position and Concerns
Frasers Group expressed its opinion that it could be the best steward for Mulberry, capable of guiding the brand back to profitability amidst its current financial troubles.
Frasers pointed to a significant warning from Mulberry’s auditor concerning ‘material uncertainty’ about the company’s continuing viability. The timing of Mulberry’s rights issue announcement, which coincided with the takeover offer, also drew frustration from Frasers, who deemed the lack of engagement with minority shareholders as unacceptable.
Future Strategic Plans
Despite declining the bid, Mulberry has outlined plans to use the newly raised capital to stabilise its finances and support the strategic vision of CEO Andrea Baldo.
Baldo’s strategy focuses on rejuvenating the brand and leveraging this fresh funding to strengthen Mulberry’s market position amidst ongoing economic uncertainties.
Regulatory and Competitive Landscape
UK takeover regulations stipulate that Frasers Group has until 28 October to submit a definitive offer or withdraw.
Should Frasers decide to withdraw, they would be barred from making another bid for a six-month period, unless a rival bidder steps forward with an offer.
Conclusion
Mulberry’s firm rejection of Frasers Group’s bid underscores its confidence in the current leadership and strategic direction.
With Andrea Baldo at the helm and access to new capital, Mulberry aims to navigate through its financial challenges and achieve long-term stability and profitability.
Mulberry’s firm rejection of Frasers Group’s bid underscores its confidence in the current leadership and strategic direction.
With Andrea Baldo at the helm and access to new capital, Mulberry aims to navigate through its financial challenges and achieve long-term stability and profitability.
