Frasers Group bids for Mulberry amid financial challenges, aiming to avoid ‘another Debenhams situation’.
- Mulberry swiftly rejects Frasers’ £83 million offer, citing the company’s substantial future potential.
- Majority shareholder Challice backs Mulberry, reducing Frasers’ influence with only 36.8% shareholding.
- Frasers concerns over lack of transparency and engagement escalate after Mulberry’s financial downturn.
- Uncertain takeover prospects with UK rules setting a deadline for Frasers to make a firm offer by 28 October.
Frasers Group has initiated a takeover attempt of Mulberry to prevent what it describes as ‘another Debenhams situation’. This move comes after Mulberry’s financial report revealed a pre-tax loss of £34.1 million and a significant drop in sales.
Following the rejection of Frasers’ £83 million offer by Mulberry, the luxury firm insists the proposal does not reflect the true potential value of the company. Challice, holding 56.1% of shares, supports Mulberry’s turnaround strategy and is not interested in the offer.
Frustration within Frasers has grown due to alleged lack of transparency at Mulberry, particularly concerning its Asian market performance. This tension peaked when Mulberry announced its need to raise over £10 million without prior notice to Frasers, a significant shareholder.
Frasers accuses Mulberry of a lack of engagement and remains concerned about the company’s financial stability after auditors flagged ‘material uncertainty related to going concern.’ Despite these issues, Frasers believes it can restore Mulberry’s profitability through its retail expertise and distribution capabilities.
Though Frasers has faced setbacks with other luxury ventures, such as the Matches Fashion administration, it sees potential in guiding Mulberry back to success. Experts like former Drapers editor Eric Musgrave share mixed views on this prospect, noting current management challenges Mulberry faces.
Under UK takeover rules, Frasers has until 28 October to solidify its offer. However, with Challice’s majority stake and support for Mulberry’s existing plan, Frasers’ chances seem slim. The situation remains dynamic as Frasers may continue to pursue the acquisition vigorously.
The outcome of Frasers Group’s takeover bid for Mulberry remains uncertain as the deadline approaches, with significant challenges ahead.
