Frasers Group, owned by Mike Ashley, has made a takeover offer for Mulberry, a luxury handbag maker. The bid places a value of £83m on Mulberry, whose sales have decreased rapidly due to a decline in the luxury sector. Frasers is already the owner of several retailers, including Sports Direct and Flannels, and holds a 37% stake in Mulberry. The announcement follows Mulberry’s need to raise £11m to improve its finances, which was revealed last Friday.
Frasers Group claims that it was informed about the fundraising plan “immediately prior to its announcement” and that it considers the current situation to be untenable. Frasers expressed concern about the auditors’ opinion, published in its annual report on Friday, which noted that “material uncertainty related to going concern” exists. The company stated that it would not allow another “Debenhams situation,” where a viable business is forced into administration.
Debenhams, which experienced a decline in sales for many years, went into administration in 2019, with the Covid pandemic being the final blow. Head of money and markets at Hargreaves Lansdown, Susannah Streeter, stated that Mike Ashley’s dissatisfaction with Mulberry was apparent. She also commented that Frasers Group had made progress by moving upmarket, such as increasing its stake in Hugo Boss. Nonetheless, investors may be losing faith in Mulberry, as the company’s shares have fallen by 52% over the past year.
During its previous full-year results, Mulberry reported a pre-tax loss of £34.1m in the 12 months to March, contrasted with a profit of £13.2m the previous year. Group sales decreased by 4% to £152.8m. Mulberry’s share price rose by nearly 8% to 126.8p each following Frasers’ offer.
Mulberry is a longstanding British luxury brand that has faced several difficult years, but the takeover bid suggests a potential revival by Frasers Group
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