Mulberry declined an £83m takeover bid from Frasers Group amid strategic considerations.
- Frasers Group proposed a 130p per share offer, valuing Mulberry at a 30% premium on recent prices.
- The Mulberry board, after consulting advisors, deemed the offer undervalued their future potential.
- Major shareholder Challice, with a 56.1% stake, supports Mulberry’s current strategy under CEO Andrea Baldo.
- Frasers, owning 37% of shares, is concerned about Mulberry’s financial stability but has until 28 October to decide further actions.
On 30th September, Frasers Group extended a cash offer of 130p per share to Mulberry, valuing the luxury retailer at £83 million. This offer represented a 30% premium over Mulberry’s recent share price, indicating Frasers’ interest in acquiring the financially troubled brand. However, the proposal was ultimately turned down by Mulberry’s board.
The decision to reject Frasers’ bid was informed by extensive consultations with financial advisors and Mulberry’s majority shareholder, Challice. Collectively, they assessed that the bid did not sufficiently acknowledge Mulberry’s significant future growth potential. The board, therefore, concluded that accepting the offer would not be in the best interest of the company’s long-term objectives.
Challice, which holds a commanding 56.1% stake in Mulberry, aligned with this view and expressed confidence in the turnaround strategy led by the newly appointed CEO, Andrea Baldo, who took the helm in July. This strategic direction is seen as pivotal for Mulberry’s recovery and future growth prospects.
While Frasers Group owns 37% of Mulberry’s shares, it has expressed concerns regarding the business’s financial viability, especially after auditors highlighted ‘material uncertainty related to going concern.’ Frasers has emphasised the need for Mulberry to avoid situations like that of Debenhams, which faced administration despite being a viable business.
The Mulberry board plans to proceed with a capital raising initiative to secure over £10 million in cash, providing an opportunity for all shareholders to participate equally in supporting the company’s recovery efforts. Frasers Group must announce a definite offer by 28th October or abandon its takeover ambitions. Notably, the board remains open to discussions with Frasers regarding proportional participation in the capital raising process.
The rejection of Frasers Group’s offer underscores Mulberry’s commitment to its independent recovery strategy and future growth.
