LONDON — Less than a year after buying Matches, and then shutting it down, Mike Ashley is back on the prowl, making a cash offer for Mulberry worth 83 million pounds.
Ashley’s Frasers Group, which holds a 37 percent stake in Mulberry, announced its bid on Monday, three days after the British accessories brand said it was planning a 10.75 million pounds capital raise.
In a statement to the London Stock Exchange, Frasers said it would offer 130 pence in cash for each Mulberry share that it does not own, and spend around 52.4 million pounds.
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It said the offer represented a 30 percent premium to the subscription price of the capital raise, and an 11 percent premium to Mulberry’s closing price on Sept. 27.
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As reported, the capital raise will be underwritten by the brand’s majority shareholder, Challice Ltd., which is controlled by the Singapore-based Ong Beng Seng and his wife Christina Ong.
Challice holds a 56 percent stake in the company, with the remainder of the Mulberry shares quoted on the London Stock Exchange.
Frasers said it would pay for Mulberry with existing resources, and touted “a significant level of cash financial fire power.”
For the offer to succeed, Frasers would need the backing of the Mulberry board of directors and Challice Ltd. Mulberry declined to comment on Monday.
Frasers made the offer for a variety of reasons. Ashley’s company said it was blindsided by the capital raise, and needed to act quickly.
Frasers said it would have been “willing to underwrite the [capital] subscription in its entirety, and potentially on better terms. 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.”
Frasers also said that Mulberry is on shaky ground — and wants to save it.
“The company is facing unabating difficulties [including] rising costs, macro-economic headwinds, and increased selectivity from its discretionary customer base,” Frasers said.
Frasers added that it is “exceptionally concerned by [Mulberry’s] latest annual report,” which mentioned a “material uncertainty” in the business going forward.
“We have long been supportive of [Mulberry] and the 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,” it said.
As reported, in the 12 months to March 30, Mulberry group revenue fell 4 percent to 152.8 million pounds due to a challenging second half, “with ongoing macro-economic uncertainty impacting consumer spending in the luxury retail sector.”
Underlying loss before tax was 22.6 million pounds, compared with a profit of 2.5 million pounds in the previous period. Reported loss before tax was 34.1 million pounds compared with a profit of 13.2 million pounds in the previous year.
Mulberry said Friday the aim of the capital raise is to strengthen the balance sheet and empower the new chief executive officer, Andrea Baldo, to execute his strategy.
Baldo was named CEO in July, and joined Mulberry on Sept. 1. He was most recently CEO of the Copenhagen-based brand Ganni, and has more than two decades’ experience in fashion and accessories.
This is the second time in four years that Ashley has made a run at Mulberry.
In 2020, he built up a stake so high that he was forced to make a bid, or walk away. He walked away.
Known as the Grim Reaper of the high street, Ashley specializes in buying stakes in distressed companies, or in companies such as Mulberry, which sell through his retail chains.
Frasers Group, which is headed by Ashley’s son-in-law Michael Murray, owns the British retailers Sports Direct, Lilywhites, the House of Fraser department store chain, the fashion retailer Flannels and Jack Wills, among other companies.
Late last year, Frasers purchased the luxury multibrand retailer Matches at a knockdown price of 52 million pounds, and within months placed it into administration.
At the time, Frasers said the company was too expensive to bankroll against a backdrop of dwindling demand for luxury goods and a persistent cost-of-living crisis.
After placing the company into administration Frasers later repurchased the intellectual property and non-tangibles belonging to Matches. Administrators, meanwhile, sold off millions of pounds worth of Matches’ merchandise, leaving many designers out of pocket, and unsecured creditors with estimated claims of nearly 36 million pounds.
The collapse of Matches, a major supporter of well-known brands and emerging talent, rocked the industry, forcing designers to scramble for money and find new investors and sales channels.
The British Fashion Council also stepped in to help designers after Matches collapsed.
BFC chief executive officer Caroline Rush told WWD earlier this month that she and her team tried to soften the blow and connect crisis-hit designers, such as Roksanda Ilinčić, with potential investors. Ilinčić eventually found a white knight in The Brand Group, which purchased her fashion label in May.
Rush said that following Matches’ collapse, “there was an opportunity for us to leverage the network, to get information to designers, support them, and protect the ecosystem.” At the time, the BFC was also having conversations with the government about how it could help brands hit by the Matches crisis access emergency financing.