Mulberry rejects £111m takeover proposal from Frasers

22nd Oct 2024 08:24

(Sharecast News) - Mulberry rejected a second takeover proposal from Mike Ashley's Frasers Group on Tuesday, saying it was "untenable".

The luxury handbag maker announced on 1 October that it had rejected an £83m, or 130p a share proposal from Frasers, which already owns a 37% stake in the group. It said at the time that the proposal failed to recognise its "substantial future potential value".

On Tuesday, Mulberry said it was rejecting Frasers' sweetened £111m or 150p a share proposal, made on 11 October. This comes after major shareholder Challice said it had no intention of selling its 56.4% stake to Frasers Group despite the increased bid.

Challice is controlled by Singaporean entrepreneur Christina Ong and her husband, Ong Beng Seng and can block any bid. It called on Frasers to abandon its bid, saying it came at an "inopportune time" for the struggling brand.

Mulberry said that after careful consideration with its advisers and in light of Challice's position, "the board is unanimously of the view that the possible offer is untenable and that the company should focus its attention on driving the commercial performance of the business".

At 0955 BST, Mulberry shares were down 3.2% at 123.41p.

Russ Mould, investment director at AJ Bell, said: "Frasers was never going to win the takeover battle for Mulberry with a bigger shareholder blocking its way. Challice owns 56.4% of the luxury goods retailer and doesn't want Frasers to buy it. Whatever it says goes, given the size of its stake, and so Mulberry's board have unsurprisingly rejected Frasers' latest bid.

"The debate now shifts to whether Frasers will keep its stake in the business or whether it will push for Challice to buy it out and take the business private. There seems little point in Mulberry remaining a listed company if Frasers loses interest after the bid.

"Frasers has made it perfectly clear that it is worried about the path Mulberry is taking, saying there is 'no current commercial plan, turnaround or otherwise'. Given that Frasers' help has effectively been spurned by Mulberry rejecting its bid, it's hard to see the Sports Direct owner wanting to hang around for long."