Frasers Group has announced a bid to acquire Mulberry, expressing serious concerns about the retailer’s financial viability.
- The luxury retail sector is experiencing a downturn, impacting Mulberry’s recent financial performance.
- Frasers Group criticises Mulberry’s lack of communication regarding a recent cash raise initiative.
- A cash offer of 130p per share has been made by Frasers Group, valuing Mulberry at £83m.
- Frasers aims to ensure Mulberry’s stability and long-term success through its expertise.
Frasers Group, led by Mike Ashley, has taken a decisive step by placing a bid to acquire the luxury brand Mulberry, following the latter’s failure to communicate plans to raise additional funds. Frasers, which already owns 37% of Mulberry shares, expressed its alarm after Mulberry’s auditors indicated a ‘material uncertainty related to going concern.’
The luxury sector is currently navigating turbulent waters, with Mulberry reporting an 18% drop in sales for the current financial year. The retailer’s recent financial statements revealed a swing to a loss, prompting the need to raise over £10 million in cash. However, Frasers was reportedly made aware of this capital raise only shortly before the public announcement.
In response, Frasers has extended a cash offer of 130p per share, positioning this bid as a 30% premium to the 100p subscription price at Mulberry’s recent retail offer, and 11% above Mulberry’s closing share price prior to the announcement. Frasers underscores that it would have been willing to underwrite this subscription entirely, indicating its commitment as a long-term investor.
Despite a non-binding indicative offer over the weekend, which only garnered an unsatisfactory ‘holding response’ from Mulberry, Frasers emphasised its readiness to utilise its retail expertise to return Mulberry to profitability, thereby avoiding another Debenhams-style collapse.
Frasers Group articulated concern over the rising costs and macroeconomic challenges faced by Mulberry, alongside a more selective consumer base. The group’s offer is framed as part of its broader strategy to stabilise and enhance Mulberry’s operational and financial trajectory.
Frasers Group’s bid reflects its proactive approach to safeguarding Mulberry’s future amidst sectorial and macroeconomic challenges.
