Mulberry Rejects Frasers Group’s Second Takeover Bid: Luxury Brand’s Future Hangs in Balance
In a surprising turn of events, British luxury brand Mulberry has once again rebuffed an acquisition attempt by Frasers Group, igniting discussions about the future of the iconic handbag maker. This latest development marks the second unsuccessful bid by Frasers to secure a majority stake in Mulberry, leaving industry observers speculating about the brand’s next moves.
The Initial Offer and Rejection
On September 30, Frasers Group made its first move with an offer of £83 million to take over Mulberry. The luxury brand’s board, while acknowledging Frasers as “a committed and important investor,” firmly rejected this initial proposal. Mulberry cited recent strategic moves, including the appointment of Andrea Baldo as CEO, as evidence of its commitment to executing a turnaround plan and delivering value to all shareholders.
Frasers’ Revised Bid and Concerns
Undeterred, Frasers Group returned with a revised offer on October 11. In this second attempt, the retail conglomerate expressed “significant reservations” about Mulberry’s financial stability. Frasers argued that the funds raised through Mulberry’s recent subscription offer might be insufficient to support the business in the near to medium term, potentially necessitating another capitalization event.
Furthermore, Frasers Group criticized what it perceived as a lack of a clear commercial plan or turnaround strategy at Mulberry. This assessment was based on limited engagement with Mulberry representatives following the initial proposal.
Mulberry’s Response and Future Considerations
In response to the renewed pressure from Frasers, Mulberry’s board announced on Monday that it is “working with advisers to consider the Company’s position.” The luxury brand promised further announcements “in due course,” leaving stakeholders eager for more details about its plans to navigate these challenging times.
The Clock is Ticking
According to London Stock Exchange rules, Frasers Group now faces a deadline of October 28 to either announce a firm intention to make an offer for Mulberry or declare that it does not intend to proceed with the acquisition. This ticking clock adds an element of urgency to the unfolding drama.
Mulberry’s Financial Struggles
The takeover bids come against a backdrop of financial challenges for Mulberry. In its full-year fiscal results released on September 27, the company reported a 4% decline in group revenue for the year ending March 30. More alarmingly, Mulberry recorded a pre-tax loss of £34 million, a stark contrast to the £13.2 million pre-tax profit in 2023. In response to these difficulties, Mulberry initiated a subscription for 10 million new ordinary shares, aiming to raise gross proceeds of £10 million.
Frasers Group’s Acquisition Challenges
While Frasers Group pursues Mulberry, it’s worth noting that the company has faced its own challenges in recent acquisitions. In March, Frasers was forced to place recently acquired retailer Matches into administration, barely three months after the purchase. This setback occurred despite Frasers’ initial optimism that the Matches deal would strengthen its luxury offerings.
The Road Ahead
As the luxury retail landscape continues to evolve, the ongoing saga between Mulberry and Frasers Group highlights the complexities and challenges facing the industry. With Mulberry’s rejection of the second bid, all eyes are now on both companies to see how they will navigate this high-stakes situation. Will Frasers return with an even more attractive offer, or will Mulberry chart its own course towards recovery? The coming weeks promise to bring further developments in this captivating corporate drama.