Mulberry, the UK prestigious brand famous for its leather handbags, has turned down a conditional proposal lodged by Mike Ashley’s Frasers Group. The proposal was dismissed as it undervalued the considerable prospective worth Mulberry possesses, according to the luxury brand and its main, long-term shareholders, the Ong family from Singapore that possesses a 56 per cent stake in the brand. Even though Frasers, who currently owns around 36.8 per cent of shares, proposed a bid of 130p per share (which was an 11 per cent premium to the Friday closing price), the offer was seen as too low. This proposition valued the currently underperforming brand at approximately £83 million (€99 million).
Mulberry displayed its optimism for a turnaround, following the appointment of a new CEO, Andrea Baldo, in July. It also mentioned a fundraiser of nearly £11 million from current shareholders to bolster its financial condition, aiming for a stable platform for recovery that would be advantageous for its shareholders.
The brand reinforced that Challice, the entity controlled by the billionaire couple Ong Beng Seng and Christina, endorsed the company’s strategy and expressed no intention to back the unlikely proposal lodged by Frasers.
Frasers would need the approval of the Ong family for the stake it doesn’t own yet. Mulberry had declared a pre-tax loss of £34 million for the year on Friday, contrasted against an earning of £13 million the prior year. This was on the back of a revenue drop of 4 per cent, tallying at £153 million.
Nevertheless, the brand known for its upscale retail operations, including a stake in Hugo Boss and ownership of the luxury department store Flannels, is open to further talks with Frasers on a pro-rata participation following a potential fundraising scheme. Mulberry has addressed “material uncertainty related to going concern” in its annual report after Frasers declared it would reject any Debenhams-like situation that might lead to the administration of a perfectly viable business.
In 2020, Debenhams entered administration, turning down a final salvage proposal from Frasers, erstwhile known as Sports Direct and a stakeholder, amidst a contentious dispute with Debenhams’ board for business control. Frasers has a deadline of October 28th to confirm an official bid or back out. In 2020, it acquired a share in Mulberry, a major provider to House of Fraser, a department store chain that Frasers took over following its downfall in 2018. Copyright The Financial Times Limited 2024.