LONDON — Mulberry’s board of directors has joined majority owners Challice Ltd. in rejecting Frasers Group’s beefed-up bid for the company.
On Tuesday, the board said it is “unanimously of the view” that Frasers’ preliminary offer is “untenable,” and that Mulberry should continue to focus its attention on driving the commercial performance of the business.
Earlier this month, Challice — which is controlled by Ong Beng Seng and Christina Ong — rejected Frasers’ proposal and asked the group, which is controlled by the retail tycoon Mike Ashley, to walk away.
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As reported earlier this month, Frasers’ increased its proposed cash offer to around 111 million pounds from 83 million pounds, equivalent to 1.50 pounds for each Mulberry share.
Challice, which holds a 56.4 percent stake in Mulberry, said it would not sell its shares, and made clear that Frasers’ bid would be unsuccessful. Frasers is Mulberry’s largest minority shareholder, with around 37 percent of shares.
On Tuesday, the Mulberry board reiterated its support for the new chief executive officer Andrea Baldo and said that a new debt facility and capital raise underwritten by Challice “will put the group on a firm footing to ensure we are well set up for future growth.”
The board also acknowledged Frasers’ support for Mulberry and the recent capital raise, and said it looks forward to further interactions with Frasers in the future.
Per London Stock Exchange rules, Frasers has until Oct. 28 to announce a firm intention to make an offer for Mulberry, or confirm that it does not intend to do so.
Ashley specializes in buying stakes in distressed companies, or in companies such as Mulberry, which sell through his retail chains.
Frasers has described Mulberry’s latest financial results as “catastrophic,” and said it strongly believes it can provide the “appropriate insulation and investment to support a much-loved British brand. As part of the Frasers portfolio, the Mulberry brand would be provided with the platform to ensure its long-term survival and success.”
As reported, Mulberry swung to a pretax loss of 34.1 million pounds amid declining revenue and increased operational costs in the 12 months to March 30. Mulberry is one of many luxury accessories brands to be hit by a slowdown in demand, especially from Chinese consumers.
Last month, as part of a plan to help the business, Challice underwrote a capital raise worth 10 million pounds.
While Frasers may cast itself as Mulberry’s savior, the company hasn’t exactly proven itself as a great caretaker of luxury brands.
Late last year, it purchased Matches at a knockdown price of 52 million pounds, and then placed it into administration shortly afterward. Frasers quickly repurchased the IP, while administrators sold off millions of pounds of fashion stock, leaving many of Matches’ designers and brands trying to recoup their losses.