Mulberry’s largest buyers refuses to promote to Frasers

Mulberry is consulting advisers on Frasers Group’s newest takeover proposal after its largest shareholder voiced its rejection of the the £111million offer.

Challice Limited, which owns a 56 per cent stake in Mulberry, said on Friday it had ‘no interest’ in selling its shares in the luxury fashion brand to Frasers.

The Singapore-based conglomerate, owned by billionaire Ong Beng Seng and his wife Christina Ong, said it was ‘an inopportune time for Mulberry to be sold’.

Frasers originally made an £83million offer for Mulberry on 30 September, saying the handbag maker had faced ‘unabating difficulties’ including higher costs, economic headwinds and ‘increased selectivity’ from its customer base.

In its latest annual results covering the year ending March, Mulberry’s turnover slid by 4 per cent following weaker trade in Britain and lower footfall across China and South Korea.

As a result, the London-listed company slumped to a £34.1million pre-tax loss, with further impact coming from an £8.6million impairment charge on retail outlets.

Mulberry further revealed that sales had slumped by 18 per cent in the first 25 weeks since the period ended amid continued global economic pressures.

Yet it turned down Frasers’ offer, saying the recent appointment of chief executive Andrea Baldo and £10.8million fundraising plan provided it with a ‘solid platform’ to spur a turnaround and give the ‘best value’ for investors.

Mike Ashley’s retail empire then marginally upped its stake in Mulberry from 36.9 per cent to 37.3 per cent after acquiring £4million of shares before coming up with its latest £111million takeover deal.

The new proposal represents a 28 per cent premium to Mulberry’s closing share price on 27 September before the current offer period began.

Frasers told shareholders on Friday that it ‘strongly believes it can provide the appropriate insulation and investment to support a much-loved British brand’.

Following this announcement and consultation with Challice, Mulberry said it was ‘working with advisers to consider the company’s position and will provide a further announcement in due course’.

It added: ‘The board highlights that there can be no certainty that an offer will be made for the company nor as to the terms on which any such offer might be made.’

Mulberry shares responded positively to the upgraded Frasers proposal, soaring 18.2 per cent to 130p on Monday morning.

Based in Shirebrook, Derbyshire, Frasers Group owns multiple well-known clothing and sports brands, such as Sports Direct, Lonsdale, Slazenger, Jack Willis, and Evans Cycles.

The FTSE 100 business has gradually expanded its investments in high-end brands amid subdued global consumer spending on luxury goods.

Over the summer, Frasers bought THG’s luxury goods websites, such as Coggles, as part of a multi-year partnership and only last week, it raised its stake in German fashion retailer Hugo Boss to around 16.4 per cent.

But despite raising its offer for Mulberry, Russ Mould, investment director at AJ Bell, said: ‘Frasers has little chance of winning the bid for Mulberry given the gigantic obstacle in its path.’

He noted that the 150p-per-share offer represents half of what Mulberry was trading at just a few years ago, so ‘it is unlikely to cut the mustard with Challice.’