Blow to Fraser takeover bid as Mulberry’s biggest investor refuses to sell

Mulberry is consulting advisers on a proposed new takeover of Frasers Group after its largest shareholder expressed its rejection of the £111m offer.

Challice Limited, which owns a 56 per cent stake in Mulberry, said on Sunday it had “no interest” in selling its shares in the luxury fashion brand to Frasers.

The Singapore-based conglomerate, owned by billionaire Ong Beng Seng and his wife Christina Ong, said it was “an inopportune time to sell Mulberry”.

Frasers originally made an £83m bid for Mulberry on September 30, saying the handbag maker had faced “ongoing difficulties” including higher costs, economic difficulties and “increased selectivity” of its customer base.

In its latest annual results covering the year to March, Mulberry’s turnover fell 4 percent following weaker trade in Britain and lower footfall in China and South Korea.

As a result, the London-listed company fell to a pre-tax loss of £34.1m, with a further hit coming from an £8.6m impairment charge on retail outlets.

Mulberry further revealed that sales had fallen 18 per cent in the first 25 weeks since the period ended amid continued global economic pressures.

However, it rejected Frasers’ offer, saying the recent appointment of chief executive Andrea Baldo and £10.8m fundraising plan provided it with a “strong platform” to drive change and deliver the “best value.” to investors.

Mike Ashley’s retail empire then marginally increased its stake in Mulberry from 36.9 per cent to 37.3 per cent after acquiring £4m of shares before agreeing its latest £111m takeover deal sterling.

The new proposal represents a 28 percent premium to Mulberry’s closing share price on Sept. 27 before the current offering period began.

Frasers told shareholders on Friday that it “strongly believes it can provide the right insulation and investment to support a much-loved British brand”.

Following this announcement and consultation with Challice, Mulberry said it was “working with advisors to consider the company’s position and will provide a further announcement in due course.”

He added: “The board highlights that there can be no certainty that an offer will be made for the company or the terms on which such an offer might be made.”

Mulberry Stocks responded positively to Frasers’ improved proposal, rising 18.2 per cent to 130p on Monday morning.

Based in Shirebrook, Derbyshire, Frasers Group owns a number of well-known sports and clothing brands including Sports Direct, Lonsdale, Slazenger, Jack Willis and Evans Cycles.

The FTSE 100 business has gradually expanded its investments in high-end brands amid subdued global consumer spending on luxury goods.

Over the summer, Frasers bought THG’s luxury goods websites such as Coggles as part of a multi-year partnership and just last week increased its stake in German fashion retailer Hugo Boss to around 16.4 per cent. hundred.

But despite raising its bid for Mulberry, Russ Mould, investment director at AJ Bell, said: “Frasers has little chance of winning the bid for Mulberry given the gigantic hurdle in its path.”

He noted that the 150 pence per share offer is half of what Mulberry was trading at just a few years ago, so it is “unlikely to be enough for Challice”.