Mulberry Rejects Frasers’ Cash Offer, Pursues Capital Raise and Backs New CEO Andrea Baldo

by · WWD
Andrea Baldo took up his role as CEO of Mulberry on Sept. 1, 2024.Courtesy

LONDON – The Mulberry board has rebuffed Mike Ashley‘s Frasers Group, which on Monday made a cash offer of 83 million pounds for the loss-making company, promising to restore it to profitability.

In a statement to the London Stock Exchange, Mulberry‘s board said it would pursue its strategies without help from Frasers, which holds a substantial minority stake in the British accessories brand.

The board gave its full backing to Andrea Baldo, Mulberry’s new chief executive officer, and reiterated its plan to raise 10.75 million pounds in fresh capital. It said both moves will restore Mulberry’s fortunes and deliver value to shareholders.

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The board said that Frasers’ offer does not recognize Mulberry’s “substantial future potential value.” It added that the Challice Ltd., Mulberry’s majority shareholder, “is supportive of the company’s strategy, and has no interest in supporting” Frasers’ offer.

Challice Ltd. is controlled by the Singapore-based Ong Beng Seng and his wife Christina Ong.

The board confirmed it has “no intention” of withdrawing or terminating Mulberry’s plans to raise new capital.

The move was announced last week, at the same time that Mulberry reported a 4 percent decline in sales in the year ended March 30, and a reported loss before tax of 34.1 million pounds compared with a profit of 13.2 million in the previous year.

The statement described Frasers as a “committed and important investor in Mulberry” and said “the board looks forward to engaging further with Frasers regarding a pro rata participation” in the capital raise.

Last week, Mulberry chairman Chris Roberts said he has every confidence that Mulberry will be able to recover from last year’s losses.

“While the financial performance for the year was disappointing, we believe that the combination of the appointment of a new CEO, our new debt facility and the capital raising will put the group on a firm footing to ensure we are well set up for future growth. We are confident in our long-term prospects as we move forward into this next chapter,” Roberts said.

Per stock exchange rules, Frasers now has to deliver a firm and final offer for Mulberry, or announce that it does not intend to make an offer, by no later than 5.00 p.m. London time on Oct. 28.

This is the second time in four years that Ashley has made a run at Mulberry.

In 2020, he built up a stake so high that he was forced to make a bid, or leave the company. He eventually walked away. 

Ashley specializes in buying stakes in distressed companies, or in companies such as Mulberry, which sell through his retail chains.

Frasers Group, which is headed by Ashley’s son-in-law Michael Murray, owns the British retailers Sports Direct, Lilywhites, the House of Fraser department store chain, the fashion retailer Flannels and Jack Wills.

It purchased luxury retailer Matches late last year, and then swiftly placed it into administration, arguing it was too expensive to bankroll against a backdrop of dwindling demand for luxury goods and a persistent cost-of-living crisis.