Frasers Group has submitted a bid for the troubled Mulberry, criticizing the luxury brand for failing to disclose its intentions to seek additional funding.
Under the leadership of Mike Ashley, Frasers, which holds a 37% stake in Mulberry, expressed it is “exceptionally concerned” following the luxury retailer’s auditors indicating “material uncertainty related to going concern” last Friday. Frasers declared it would “not tolerate another Debenhams scenario where a viable business faces administration.
Frasers has proposed a cash offer of 130p per share, valuing Mulberry at £83 million. The group highlighted that this represents a 30% premium over the £1.00 subscription price for the luxury brand’s retail offer and an 11% increase compared to the closing share price on Friday (27 September).
On Friday, Mulberry announced plans to generate over £10 million in cash and disclosed a loss for its most recent financial year. The company also reported an 18% drop in group sales for the current year to date, attributing it to a slowdown in the luxury market.
Frasers claimed it was only informed about Mulberry’s fundraising efforts just “before its announcement” on Friday.
The company stated: “As a committed, long-term investor in Mulberry, Frasers would have been open to fully underwriting the subscription, potentially providing more favorable terms for the business. Given the complete lack of communication, we consider the existing arrangement to be an untenable position for Frasers and other minority shareholders in Mulberry.”
Over the weekend, Frasers submitted a “non-binding indicative offer” for the shares it does not already own. However, after receiving a “holding response” yesterday, it deemed the reply “wholly unsatisfactory.” Thus, the group has moved forward with a cash offer for the entire business.
Frasers Group commented: “We have always been supportive of the brand and the commercial prospects it offers. With our extensive retail expertise and robust distribution capabilities, we believe Frasers is the most suitable partner to help Mulberry return to profitability.”
“The company is grappling with relentless challenges, including rising expenses, macroeconomic pressures, and heightened selectivity from its discretionary customer base. Frasers is extremely concerned by the audit opinion in the most recent annual report released on Friday, 27 September 2024, which highlights a “material uncertainty related to going concern.”
“As a shareholder with a 37% stake, Frasers will refuse to experience another Debenhams situation, where a viable business is driven into administration.”
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