Battle Lines Drawn As Mulberry Rebuffs Second Bid From Frasers Group

The board of U.K. luxury brand Mulberry has unanimously rejected a second bid from British retail multi-brand business Frasers Group, describing it as “untenable”.

The announcement came after Frasers – majority owned by colorful founder Mike Ashley – launched its first bid on Oct. 1 for around $110 million, which was subsequently rejected as too low by Mulberry, and its second of circa $144 million on Oct. 11.

Frasers’ bid has the company, the luxury retailer and majority shareholder Challice locked in a three-way battle for an upscale British brand that has struggled in the post-pandemic world. Fellow U.K. luxury label Burberry has also faced a number of challenges over the past few years, and has gone through a series of leadership and creative changes.

And Mulberry doubled down on its statement from the first time it rejected Frasers’ bid, stating: “We believe that the combination of the appointment of a new CEO, our new debt facility and the capital raising announced today [Sept. 30] will put the Group on a firm footing to ensure we are well set up for future growth.”

That capital raising references an emergency $14.4 million placing of shares to boost its balance sheet in September after Mulberry said that it had said it needed to raise cash through the issue of 750,000 additional sales priced at $1.34 each plus a $13.4 million subscription offer from majority shareholder Challice.

It had reported a $45.6 million pre-tax loss in the year to the end of March, in contrast with a $17.4 million profit a year prior, after sales declined by 4% to $205 million. It added during the update that sales were down by 18% for the 25 weeks since the period ended.

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Mulberry Changes CEO

In July, Mulberry had surprised the market when it had announced a change in chief executive after Andrea Baldo ousted Thierry Andretta as the firm’s boss, with the latter exiting the company with immediate effect, having been at the helm since 2015.

Part of the reason Frasers launched its initial bid was because it had not been included in this capital raise – although it later participated – which clearly hit a raw nerve.

Frasers said in making the bid that it would “not accept another Debenhams situation where a perfectly viable business is run into administration”, referring to the collapse of the U.K. department store in 2019, which wiped out shareholders such as Ashley’s retail group.

Last week Mulberry said that in light of Frasers’ $144million bid, it was now “working with advisers to consider the company’s position,” despite Challice’s public snub of the deal.

Challice Rejects Frasers' Bid

Challice, which is backed by a Singapore-based firm owned by billionaires Christina Ong and Ong Beng Seng, retains a 56% stake in the luxury retailer, meaning Frasers would need the support of Challice to complete any successful bid.

And after Frasers’ second bid, Challice said that it had “no interest in… selling its Mulberry shares to Frasers”, adding that it was an “inopportune time” for Mulberry to be sold.

“Challice hopes that by making its position clear, Frasers will be encouraged to announce that it does not intend to make an offer for Mulberry,” the company said in a statement.

For its part, Frasers is 73%-owned by Mike Ashley's MASH Holdings vehicle but the retail business is now run by his son-in-law Michael Murray.

Under London Stock Exchange rules, Frasers has until 5pm on Oct. 28 to either announce a firm intention to make an offer for Mulberry or to announce that it does not intend to make an offer.