Frasers Group has made a bid for embattled Mulberry as it blasted the luxury retailer for not informing it about its plan to raise more funds.
The Mike Ashley-controlled group, which owns 37% of Mulberry’s shares, said it is “exceptionally concerned” as the luxury retailer’s auditors flagged there was “material uncertainty related to going concern” on Friday. Frasers said it would “not accept another Debenhams situation where a perfectly viable business is run into administration”.
It has put forward a cash offer of 130p per share, which values Mulberry at £83m. Frasers pointed out this is a 30% premium on the 100p subscription price on the luxury firm’s retail offer, and is 11% higher than the firm’s closing share price on Friday (27 September).
Mulberry unveiled plans to raise over £10m in cash on Friday as it revealed it had swung to a loss in its last financial year. It said group sales had plunged 18% in its current year to date amid a slowdown in the luxury sector.
Frasers said it was not made aware of Mulberry’s cash call until “immediately prior to its announcement” on Friday.
It said: “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.”
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Frasers had proposed a “non-binding indicative offer” for the shares it did not own over the weekend, and whilst it received a “holding response” yesterday it said this was “wholly unsatisfactory”. It has therefore put forward a cash offer for the business.
Frasers Group said: “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.”
“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.”
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