Posh handbag maker Mulberry (MUL:AIM) has rejected (1 October) a potential £83 million takeover proposal from Frasers (FRAS), Mike Ashley’s sprawling retail conglomerate.
Like Lord Wolfson’s Next (NXT), Frasers is expanding its stable of brands through acquisitions of, and investments in, distressed retail assets and on 30 September, proposed a 130p cash offer for Mulberry. However, the embattled British luxury brand spurned the bid on the grounds the offer does not recognise its ‘substantial future potential value’.
Pursuing a strategy to go more upmarket, Frasers holds a sizeable 36.8% stake in struggling Mulberry, but the target has an even bigger shareholder in 56.1% owner Challice, which is backing new CEO Andrea Baldo’s turnaround strategy and doesn’t want to sell out to Frasers. Both Frasers and Challice, controlled by billionaire Ong Beng Seng, are logical owners of the Bath-based fashion house, making this a tricky situation.
On account of its ‘leading retail expertise and presence, and best in class distribution capability’, Frasers is convinced it is the ‘best steward for returning Mulberry to profitability’. Ashley’s charge said it won’t accept ‘another Debenhams situation where a perfectly viable business is run into administration’: for the uninitiated, Debenhams went into administration in 2020 having rejected a rescue plan by Frasers, known as Sports Direct at the time.
Famed for its leather handbags, Mulberry, which lurched into loss for the year ended 30 March 2024 amid falling sales and rising costs, has rejected Frasers’ takeover overtures but would accept its cash as part of a fundraising to shore up its balance sheet. Frasers has until 28 October to make a formal offer or walk away.
Drama is also unfolding in another part of the Frasers empire, namely beleaguered fast-fashion group Boohoo (BOO:AIM), the owner of the Debenhams brand and in which Ashley’s charge has amassed a 26.1% stake. Management is mulling a break-up of the loss-making fashion business amid shareholder pressure to unlock value and revive its flagging fortunes.
According to The Times, various shareholders have urged Boohoo’s board to sell or spin off Karen Millen and Debenhams and sell winning brands such as Boohoo and PrettyLitleThing in a bid to boost the shares, which have shed 90% of their value in the last past five years. Boohoo, which is shutting down its US distribution centre having struggled to crack the notoriously fickle fashion market across the pond, is thought to be waiting to assess its Christmas trading performance before finalising a break-up plan.
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