Mulberry rejects Frasers £83m offer

Expensive handbag maker Mulberry has rejected an £83m takeover offer from Mike Ashley’s Frasers Group saying it failed to recognise the company’s “substantial future potential value”.

Frasers, which already holds a 37% stake in Mulberry, on Monday offered a 130p a share in cash in an angry response to an emergency £10.75m placing of shares in the luxury group late on Friday to support its balance sheet after slumping to a £34m full-year loss.

“The board believes that the combination of the recent appointment of Andrea Baldo as CEO alongside the recently announced subscription and retail offer provides the company with a solid platform to execute a turnaround and, ultimately, to deliver best value for all Mulberry shareholders,” Mulberry said on Tuesday.

It added that Challice, the company's 56.1% majority shareholder controlled by Singaporean entrepreneur Christina Ong, was “supportive of the company's strategy and has no interest in supporting the possible offer”.

Frasers claimed it had not been made aware of raising “until immediately prior to its announcement” and would have been willing to underwrite it on better terms.

It also warned it would “not accept another Debenhams situation where a perfectly viable business is run into administration” – referring to the 2019 collapse of the department store chain which wiped out Ashley’s £150m investment into the business.

The Frasers offer for Mulberry was conditional on the raising being withdrawn and the full support of the Mulberry board.

However, Mulberry said it had no intention of withdrawing the raising, stressing that allowing all shareholders to participate on the same terms, “is the fairest and most effective way of accessing additional equity funding”.

“Recognising that Frasers is a committed and important investor in Mulberry, and has publicly stated that it would have been willing to underwrite the subscription, the board looks forward to engaging further with Frasers regarding a pro rata participation”.

Reporting by Frank Prenesti for Sharecast.com