Frasers Group, led by Mike Ashley, has decided against pursuing a £111m takeover of luxury brand Mulberry.
- This decision follows a lack of engagement from Mulberry’s board and rejection of a sweetened offer.
- Mulberry’s shares fell by 7% following the announcement of the withdrawal.
- Frasers remains concerned about Mulberry’s governance and seeks board representation.
- The decision reflects broader market challenges facing luxury brands amid economic pressures.
Frasers Group, under the leadership of Mike Ashley, recently announced the decision to halt its bid to acquire Mulberry, a well-known luxury handbag manufacturer, for £111 million. This move comes after Mulberry’s board rejected Frasers’ improved offer and demonstrated a lack of proper engagement towards the proposal. The decision not to make a firm bid was confirmed just before the bid deadline passed, leading to a 7% drop in Mulberry’s shares.
In the wake of this development, Frasers has highlighted the need for Mulberry to produce a ‘credible’ operational plan. Concerns regarding Mulberry’s governance were also raised, especially considering the dominant stake held by the Challice group, led by Singaporean entrepreneur Christina Ong. Frasers, already owning a 37% stake in Mulberry, is advocating for a board appointment to foster fuller engagement on strategic issues.
Despite Frasers’ willingness to enhance the offer to 150p per share, Mulberry’s board, along with Challice, deemed the proposal ‘untenable’ and decided against its acceptance. Mulberry is opting to concentrate efforts on strengthening its business performance, rather than proceeding with the takeover, indicating ongoing emphasis on operational improvements over structural changes.
Frasers has expressed disappointment over the board’s decision but reiterated its long-term support for Mulberry as a beloved British brand. The group remains concerned about the absence of a clear commercial plan that may pave the way through the economic headwinds facing the luxury market. Frasers also emphasized the need for transparency and equitable shareholder consideration, especially recalling a recent £10 million emergency subscription handled privately by Mulberry involving Challice’s influence.
With this latest development, Frasers, maintaining significant investment in Mulberry, continues to push for representation on the board. It remains hopeful that future engagements will address strategic governance issues effectively, further strengthening Mulberry’s position amid a challenging market environment.
Frasers’ move to withdraw the takeover bid and push for board involvement underscores the complex dynamics between governance and strategic direction in the luxury sector.
