Struggling Somerset-based fashion business Mulberry has rejected an £83m takeover bid from Frasers Group, the retail business controlled by billionaire Mike Ashley that already owns 37% of its shares.
The offer was made as Mulberry, which has manufacturing sites at Chilcompton, south of Bath, and in Bridgwater, faces some of its tough trading conditions since it was founded in 1971 by designer Roger Saul.
The group, best known for its luxury bags, recently announced it had slumped to a pre-tax loss of £34.1m in the year to 30 March against a pre-tax profit of £13.2m last time.
Group revenue fell by 4% to £152.8m as ongoing macro-economic uncertainty in the second half hit consumer spending in the luxury retail sector.
Revenue has continued to slide – down 18% for the 25 weeks since the end of March end compared to the same period last year, with retail revenue down 14%.
Frasers Group, whose brands include Sports Direct, House of Fraser, Gieves & Hawkes and Jack Wills, said it was “exceptionally concerned” at comments made by Mulberry’s auditors accompanying its financial results that there was “material uncertainty related to going concern”.
To coincide with the results, Mulberry said it planned to raise £10.75m through a share issue to strengthen its balance sheet and provide financial flexibility to support plans being developed by Andrea Baldo, the former CEO of Danish womenswear label Ganni who took over as Mulberry chief executive officer a month ago.
These plans, it said, were aimed at returning the business to profitability and to drive future growth. It stuck by that today when it released a statement rejecting Frasers Group’s cash offer of 130p a share.
That offer was, when launched, a 30% premium on Mulberry’s 100p subscription price and 11% higher than its closing share price when Mulberry’s offer was made.
In a statement Frasers Group said: “As a committed long-term investor in Mulberry, Frasers would have been willing to underwrite the subscription in its entirety, potentially on better terms for the company.
“Given this total lack of engagement, we believe the status quo to be an untenable position for Frasers and the other minority holders of Mulberry shares.”
London Stock Exchange-listed Mulberry’s shares have slumped by around 70% since 2021 and in May they fell to their lowest level for 14 years after the firm warned that its well-heeled customers were continuing to cut back on spending.
The group employs around 1,400 people across the globe and has offices in London, Paris, New York, Hong Kong, Tokyo and Seoul as well as its headquarters at Chilcompton.
Its two Somerset factories, which between them produce more than half its total output, have benefitted from new investment over recent years.
