In a surprising turn of events, Frasers Group has decided against acquiring Mulberry, raising questions about the latter’s corporate governance.
- Frasers Group owns a 37% stake in Mulberry but criticised its lack of a commercial plan amid market challenges and concerns over governance.
- The decision follows a rejected takeover bid by Mulberry, which valued the company at £111m, increased from an earlier £83m offer.
- Majority shareholder Challice, with a 56.4% stake, opposed the sale, highlighting potential distractions from the deal and Mulberry’s future value under new leadership.
- Mulberry’s board had previously engaged privately with Challice for a £10m emergency subscription, which Frasers Group criticised.
Frasers Group, the parent company of well-known retailers such as Sports Direct and Flannels, has announced its decision to abandon its bid to acquire British luxury brand Mulberry. This decision brings to an end weeks of speculation surrounding the potential takeover. The key concern raised by Frasers Group centred on Mulberry’s governance, with specific criticisms directed at what they view as a lack of a coherent commercial strategy amidst growing market difficulties.
Owning a significant 37% stake in the company, Frasers Group expressed unease about Mulberry’s governance approach. Criticisms from Frasers highlighted what they perceive as an absence of a strategic commercial plan, especially given the challenging market conditions and Mulberry’s current financial situation. Frasers Group’s apprehensions also extend towards majority shareholder Challice, and the nature of the private discussions held regarding significant financial matters, including a £10 million emergency fund raised on 27 September.
Mulberry’s board has consistently resisted the acquisition attempts, first rejecting an £83 million takeover bid on October 1, citing the company’s “substantial future potential value” under its new leadership. This resistance persisted despite the substantially increased offer of £111 million shortly thereafter. Mulberry’s firm stance was supported by Challice, which holds a 56.4% share of the company and argued that it was an inappropriate time for the company’s sale.
Challice’s rejection of the offer was firm, emphasising that the distractions created by the takeover speculation were unwelcome amidst ongoing developments led by new management. This decision was aligned with Mulberry’s update on October 22, when it reaffirmed its position against the takeover bid.
Frasers Group, while stepping down from the acquisition, remains hopeful about having a say in Mulberry’s future direction. Given its substantial shareholding, Frasers has requested representation on Mulberry’s board, a request they have reiterated in recent discussions.
The decision by Frasers Group to withdraw its takeover bid underscores ongoing tensions and differing visions for Mulberry’s future among its key stakeholders.
