Mulberry rejects £83m Frasers Group takeover bid saying it undervalues business

Mulberry said it had discussed the approach with its majority shareholder, Singapore-based Challice, which is controlled by billionaire Ong Beng Seng and his wife Christina.

Luxury handbag manufacturer Mulberry has turned down a takeover bid from Mike Ashley’s Frasers Group, which valued the company at £83m.

The struggling British fashion brand stated that the potential offer from Frasers, revealed on Monday, "does not recognise the company’s substantial future potential value". Mulberry discussed the approach with its majority shareholder, Singapore-based Challice, controlled by billionaire Ong Beng Seng and his wife Christina.

The Somerset-based firm expressed confidence in its newly appointed chief executive Andrea Baldo to lead a revival and confirmed it would proceed with plans for capital raising. It stated this "provides the company with a solid platform to execute a turnaround and, ultimately, to deliver best value for all Mulberry shareholders. In addition, the board has been informed that Challice is supportive of the company’s strategy and has no interest in supporting the possible offer."

Instead, the company will seek discussions with Frasers over a "pro rata participation" in the cash-call. Frasers Group, owner of Sports Direct and already holding a 37% stake in Mulberry, announced on Monday an approach worth 130p per share, valuing the stake in the company it does not own at £52.4m.

This follows Mulberry's announcement on Friday that it needed to raise more than £10 million after reporting a significant loss for the past year. The luxury fashion company has reported a staggering £34.1m pre-tax loss for the year ending March 31, a sharp contrast to the £13.2m profit from the previous year.

The firm noted that sales had fallen more drastically during the spring and summer months, with group revenues tumbling by 18% over the last 25 weeks as high-end shoppers tightened their purse strings. Mulberry has issued a warning within its financial statements, suggesting there is "material uncertainty, which may cast significant doubt on the group and parent company’s ability to continue as a going concern" should their financial challenges persist.

Frasers Group has expressed its intention to take control of Mulberry, partly due to these concerns about the business's long-term survival, aiming to prevent Mulberry from becoming "another Debenhams". On Monday, the company stated: "Frasers are exceptionally concerned by the audit opinion in the latest annual report released on Friday September 27 2024, which notes a ‘material uncertainty related to going concern’."

They added, "As a 37% shareholder, Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration." Mike Ashley, who previously held a stake worth approximately £180m in Debenhams before it went into administration in 2020, saw his investment become nearly valueless.

Established in Somerset in 1971 by Roger Saul, Mulberry boasts a clientele that includes the Princess of Wales and Kate Moss. The company is now under the leadership of Mr Baldo, who took over from former Ganni CEO and long-standing chief Thierry Andretta in an effort to boost performance.