Frasers Group, led by Mike Ashley, has abandoned its £111m bid for Mulberry, aiming for board engagement instead.
- The decision follows Mulberry’s rejection of Frasers’ enhanced offer and limited dialogue from Mulberry’s board.
- Mulberry’s stock fell 7% post-announcement, with governance concerns intensifying from Frasers.
- Frasers holds a 37% stake in Mulberry and seeks a board position to influence the firm’s direction.
- Mulberry prefers bolstering business performance over the takeover, backed by majority owner Challice.
In a significant development within the luxury retail sector, Mike Ashley’s Frasers Group announced it has decided not to proceed with a £111 million takeover offer for high-end handbag manufacturer Mulberry. This decision emerged after Mulberry rebuffed the latest enhanced proposal from Frasers, which was undeterred by Mulberry’s apparent lack of engagement ahead of the stipulated bid deadline. The absence of proactive engagement from the Mulberry board was expressly highlighted as a major factor in Frasers’ withdrawal from the acquisition process.
The declaration of Frasers’ withdrawal from the acquisition had immediate market repercussions, notably precipitating a 7% drop in the share price of Mulberry. The underlying issue appears to pivot around governance concerns, as Frasers continues to press Mulberry for the presentation of a ‘credible’ operational and strategic plan. The governance structure of Mulberry, significantly influenced by Challice, a company controlled by Christina Ong and Ong Beng Seng of Singaporean origin, remains a focal point of contention between the parties.
Holding a substantial 37% stake in Mulberry, Frasers has expressed a strong desire to secure a position within Mulberry’s board. This step aims to facilitate deeper engagement on vital concerns, including addressing perceived deficiencies in Mulberry’s commercial strategy and fortifying the company’s market positioning amid challenging economic conditions. However, the board of Mulberry, guided by its commitment to enhancing business performance, has consistently opted against endorsing Frasers’ approaches.
Despite the rejection of the 150p-a-share offer, which represented an increase from a previously tabled 130p-per-share bid, Mulberry’s board maintains its resolve to prioritise operational performance improvements. Challice, the predominant stakeholder, has unequivocally expressed disinterest in divesting its ownership to Frasers, further complicating acquisition dynamics. While this standstill continues, Frasers underscored its enduring commitment as a longstanding supporter of the British brand.
The rejection of the takeover bid is perceived as a ‘disappointing outcome’ by Frasers Group. Nevertheless, the group’s advocacy for improved corporate governance and strategic clarity at Mulberry underscores a broader intent to navigate the complex market environment effectively. Market analysts point to the prevailing economic pressures, particularly inflationary impacts on the luxury market, which have significantly dampened consumer demand, influencing Mulberry’s share performance, which has declined over 40% in the past year.
The interplay between Frasers and Mulberry highlights ongoing challenges and strategic considerations within the luxury retail market, with future engagements likely defining their mutual trajectories.
