In a significant corporate development, Mulberry has declined an £83 million takeover bid from Frasers Group. This decision underscores the brand’s confidence in its future trajectory under new leadership.
Mulberry’s board, after extensive deliberation and consultation with its majority shareholder, chose to reject the offer. The luxury brand believes that its recent strategic changes and leadership appointments will better serve its long-term value and growth.
Offer Rejection and Strategic Confidence
The board of Mulberry has carefully evaluated the takeover bid from Frasers Group. Following discussions with its majority shareholder, Challice, the offer was declined. Challice, holding 56.1% of the company and controlled by Malaysian billionaire Ong Beng Seng and his wife Christina, supports this decision.
In an official stock exchange announcement, Mulberry expressed confidence in the recent appointment of Andrea Baldo as CEO. The company believes this new leadership provides a solid platform for a turnaround, aiming to maximise shareholder value.
Immediate Market Response
Following the announcement of the bid rejection, Mulberry’s shares saw a notable rise of 4.8%, reaching 130p. This immediate positive reaction indicates investor confidence in the company’s independent strategy and future prospects.
Frasers Group had offered 130p per share, following a surprise £10 million rights issue. This bid represented an 11% premium to the closing price the previous Friday. Despite this premium, Mulberry remains firm in its strategic direction.
Frasers Group’s Position and Concerns
Frasers Group contended that it was best positioned to restore Mulberry’s profitability. Concerns were raised about Mulberry’s ongoing financial challenges, particularly following a warning from its auditor about “material uncertainty” regarding the company’s ability to continue operating.
The timing of Mulberry’s rights issue announcement was another point of contention for Frasers. The group found the lack of engagement with minority shareholders “untenable”, criticising the process and timing.
Mulberry’s Financial Strategy
Mulberry, which reported a £34 million pre-tax loss recently, plans to use the newly raised capital to stabilise its balance sheet. The company emphasises that this move is crucial for allowing CEO Andrea Baldo to execute his strategic vision.
The brand’s plan under Baldo involves significant restructuring aimed at ensuring long-term stability and growth. This approach is geared towards rebuilding investor trust and enhancing market position.
Deadline for Frasers Group
Under UK takeover rules, Frasers Group faces a deadline of 5pm on 28 October to make a firm offer or withdraw. If Frasers decides to walk away, it will be restricted from making another bid for six months unless another bid emerges from a rival.
This period is critical for Mulberry as it focuses on its internal restructuring and strategic plans. The company is keen on proving its ability to thrive independently in the competitive market.
Market Analysts’ Perspectives
Market analysts have mixed views on Mulberry’s decision to reject the takeover bid. Some believe that the brand’s confidence in its new leadership underlines a solid potential for recovery and growth.
Others, however, remain sceptical about the challenges the company faces. The ongoing financial losses and market competition pose significant hurdles that Mulberry must overcome to stabilise its position.
Mulberry’s rejection of the takeover bid from Frasers Group marks a pivotal point in its strategic journey. The company is focused on leveraging new leadership to navigate financial challenges and capture future growth opportunities.
The coming months will be crucial as Mulberry implements its restructuring plans and Frasers Group decides its next steps. Stakeholders are closely watching this unfolding corporate saga, as outcomes will significantly impact the luxury brand’s market trajectory.
