- Luxury bag brand Mulberry is looking to raise cash amid concerns for its future
Frasers has made an offer to buy struggling luxury brand Mulberry valuing it at £83million after the group went cap in hand to investors to raise cash last week.
Mulberry slumped to a £22.6million loss for the year to the end of March, as the handbag brand suffered from a wider slowdown in luxury spending.
This prompted bosses to seek an equity fundraise worth over £10million on Friday as they warned of worries about the company’s future as a going concern.
Mike Ashley’s retail empire, which already holds a 37 per cent stake in Mulberry, said on Monday it had been blindsided by the equity raise and would have been willing to underwrite the subscription in its entirety – potentially on better terms.
Frasers swoops on Mulberry as it warns equity raise created ‘untenable position’ for investors
Frasers said the decision had created a status quo that put Frasers and other minority shareholders in an ‘untenable position’ as it pitched a 130p-per-share offer for Mulberry.
The bid, which is yet to be acknowledged by Mulberry’s board, represents a 30 per cent premium a to Friday’s subscription price and valuing the remaining stake in the business it does not currently own at £52.4million.
However, the bid is conditional on the withdrawal of the subscription offer.
‘Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration,’ the group added, referring to its £150million investment into the extinct high street giant before it collapsed in 2021.
‘We have long been supportive of the brand and 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.’
Mulberry shares were up 8.9 per cent to 128p in early afternoon trading. They are down almost 40 per cent over the last 12 months and more than 50 per cent over the last five years.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘It’s been super tough for Mulberry as, like Burberry, it’s more reliant on aspirational shoppers than the powerhouse names in LVMH rails.
‘There have been hopes that the change at the top, with the new CEO Andrea Baldo, formerly of Danish fashion brand Ganni, coming in would help give the company new direction.
‘But as he’s unpacked his bags and tried to set out a new chapter for the company, it’s clear the current financial situation is untenable without more funding.
‘Mulberry, with its proud Somerset heritage, may be highly reluctant to be scooped into Fraser’s high-street wardrobe, but it would at least keep the brand alive.’
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