In a stunning development that has sent shockwaves through the British retail industry, luxury handbag maker Mulberry has rejected an increased £111 million takeover bid from Mike Ashley’s Frasers Group, labeling the offer as “untenable.” The decision comes amid Mulberry’s ongoing financial struggles and intensifying competition in the luxury goods market.
Mulberry Stands Firm Against Takeover Attempt
According to a close source, Mulberry’s board unanimously decided that the increased offer from Frasers Group, which had raised its initial bid from 130p to 150p per share, was not in the best interests of the company. The board reiterated its belief that with a new chief executive at the helm, a fresh debt facility, and a recent fundraising round, Mulberry is well-positioned for future growth and success.
Frasers Group’s Growing Frustration
Frasers Group, which already owns a 37% stake in Mulberry, has expressed increasing frustration with the brand’s direction and performance. The retail conglomerate, led by billionaire Mike Ashley, has warned that it does not want to see Mulberry suffer the same fate as department store chain Debenhams, which collapsed after Frasers Group lost £150 million as a shareholder.
“Words of frustration have been pumped out from both sides. Frasers Group has clearly lost so much faith in the current direction of the company, it’s fearful of collapse,” noted Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Mulberry’s Largest Shareholder Stands in the Way
Complicating matters further, Mulberry’s largest shareholder, Challice, a group controlled by Singaporean entrepreneur Christina Ong and her husband, has also rejected Frasers Group’s advances. With a 56% stake in the company, Challice has the power to block any potential takeover.
“Challice is also clearly exasperated by the relentless focus, wanting to give the new CEO, Andrea Baldo a chance to bed in and help revive the brand’s fortunes,” Streeter added.
Mulberry’s Struggle to Compete
Mulberry, known for its leather goods, hats, scarves, and other accessories, has faced significant challenges in recent years as it strives to compete against larger international luxury brands. The company reported a £34 million pre-tax loss for the year ending March 2023 and has seen a considerable decline in sales.
The brand’s woes have been exacerbated by the post-Brexit end of shopping tax breaks for tourists visiting the UK, further impacting its bottom line. As a result, Mulberry has been forced to raise cash to stay afloat, a move that caught the attention of Frasers Group.
A New Direction for Mulberry?
Under the leadership of former CEO Thierry Andretta, Mulberry attempted to reposition itself as a more upmarket brand. However, with the appointment of new chief executive Andrea Baldo, who previously ran the fashion label Ganni, industry experts anticipate a shift back towards a broader appeal.
As Mulberry navigates this critical juncture, the question remains whether the brand can successfully chart a new course and reclaim its position in the highly competitive luxury goods market. With Frasers Group’s takeover bid now rejected, all eyes will be on Mulberry’s leadership to deliver a compelling strategy for growth and profitability.
The Road Ahead
As the dust settles on this latest development, Mulberry finds itself at a crossroads. The company must now focus on leveraging its new leadership, financial resources, and iconic brand identity to reassert itself in the marketplace and win back the confidence of investors and consumers alike.
While the future remains uncertain, one thing is clear: Mulberry’s resilience and determination will be put to the test as it navigates the challenges that lie ahead. As the luxury retail landscape continues to evolve, the brand must adapt and innovate to secure its place among the industry’s elite.
