British luxury handbag maker Mulberry’s 56.4% majority shareholder Challice has turned down an enhanced £111m ($144m) acquisition proposal from billionaire Mike Ashley’s Frasers Group.
A press statement from Challice announced that it has “no interest” in offloading its shares to Frasers, which already owns a 37% stake in Mulberry.
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Frasers, which also operates Sports Direct, House of Fraser, Evans Cycles and Flannels, had raised its bid to 150p per share following a previous £83m offer at 130p per share that Mulberry rejected in early October 2024.
Frasers plans to finance the cash payment outlined in the revised proposal using its current cash resources.
According to its full-year results released on 18 July 2024, Frasers has substantial financial resources, including a term loan and revolving credit facility with total commitments exceeding £1.4bn.
The move comes in the wake of Mulberry’s announcement of a £34m pre-tax loss for the year ending in March after a downturn in sales and announced plans to raise capital from shareholders.
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By GlobalDataFrasers, having experienced a £150m loss from the Debenhams collapse, justified its bid for Mulberry, stating it would “not accept another Debenhams situation where a perfectly viable business is run into administration”.
Mulberry’s board, however, remains confident in their turnaround strategy, citing the recent appointment of Andrea Baldo as CEO and an emergency £10.75m share placing as key steps in strengthening the company’s position.
Challice, which has the power to veto any takeover attempts, has urged Frasers to abandon its takeover ambitions, deeming the timing inauspicious for the struggling brand.
While Challice acknowledged Frasers’ participation in Mulberry’s fundraising, where Frasers acquired £3.9m of new shares, it made clear its lack of interest in selling its shares or providing any commitments regarding the potential offer.
Mulberry’s owner also expressed hope that its stance would prompt Frasers to publicly withdraw its bid for Mulberry.
Houlihan Lokey UK is serving exclusively as financial adviser to Mulberry. Jefferies International is acting exclusively for Frasers.
