Shirebrook-based retail giant Frasers Group has made an offer for fashion brand Mulberry, which has been rejected.
Yesterday (30 September), Frasers, which is a significant minority shareholder owning approximately 37% of the issued share capital of Mulberry, revealed a possible cash offer for the business.
Under the terms of the deal, Mulberry shareholders would have been entitled to receive 130 pence in cash for each Mulberry share. This implies a valuation of approximately £83 million for the entire issued, and to be issued, ordinary share capital of Mulberry, or approximately £52.4 million for the entire issued and to be issued share capital of Mulberry that Frasers does not own.
The offer followed Mulberry announcing a proposed subscription for 10,000,000 new ordinary shares in the capital of the company by Challice Ltd (the company’s 56.1% majority shareholder), at a price of £1 per share, and a separate offer to existing shareholders of the company of up to 750,000 new ordinary shares at the subscription price.
Frasers said: “As a significant minority shareholder, owning approximately 37% of the issued share capital of Mulberry, Frasers was not aware of the Proposed Subscription until immediately prior to its announcement. Frasers first invested in Mulberry in February 2020 and grew its holding to approximately 37% that same year.
“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.”
The firm added: “We have long been supportive of the brand and commercial opportunities available to the Company. With our leading retail expertise and presence, and best in class distribution capability, we believe Frasers to be the best steward for returning Mulberry to profitability.
“As highlighted in the Subscription Announcement, as a standalone business, the Company is facing unabating difficulties. To name a few, rising costs, macro-economic headwinds, and increased selectivity from its discretionary customer base. Frasers are exceptionally concerned by the audit opinion in the latest annual report released on Friday, 27 September 2024, which notes a ‘material uncertainty related to going concern’. As a 37% shareholder, Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration.”
Mulberry, however, has now rejected Frasers’ offer.
Mulberry shared: “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.
“In light of this, the Board has concluded that the Possible Offer does not recognise the Company’s substantial future potential value. In addition, the Board has been informed that Challice is supportive of the Company’s strategy and has no interest in supporting the Possible Offer. As a result of the above, the Board has rejected the Possible Offer.”
