What's happened
Frasers Group has proposed a £83 million takeover bid for Mulberry, valuing shares at 130p each. Mulberry's board rejected the offer, citing its potential for future growth and support from its majority shareholder, Challice. The luxury brand is currently facing financial difficulties, including a £34 million pre-tax loss last year.
What's behind the headline?
Financial Struggles
- Mulberry reported a £34 million pre-tax loss for the year ending March 2024.
- Sales fell by 18% in the last 25 weeks, indicating ongoing challenges in the luxury market.
Frasers' Position
- Frasers Group aims to prevent a repeat of the Debenhams collapse, emphasizing the need for proactive management.
- The offer of 130p per share represents an 11% premium over Mulberry's recent closing price.
Board's Response
- Mulberry's board believes the offer undervalues the company's future potential.
- The appointment of CEO Andrea Baldo is seen as a pivotal move for a turnaround strategy.
Market Implications
- The luxury sector is experiencing a downturn, affecting consumer spending.
- Frasers' involvement could lead to strategic changes at Mulberry, impacting its market positioning.
What the papers say
According to The Guardian, Frasers Group's offer for Mulberry was made after the luxury brand announced a £10.75 million share placing to bolster its finances. The board of Mulberry stated that the offer does not reflect the company's future potential value, as reported by The Independent. Sky News highlighted Frasers' concerns about Mulberry's financial health, referencing a 'material uncertainty' in its latest annual report. The Telegraph noted that Challice, Mulberry's majority shareholder, has no interest in supporting Frasers' bid, reinforcing the board's commitment to its turnaround strategy.
How we got here
Mulberry, a luxury handbag maker, has struggled with declining sales and a significant loss in the past year. In response, it announced plans to raise over £10 million through a share placing. Frasers Group, which already owns a 37% stake in Mulberry, made its offer following this announcement, expressing concerns about the brand's future.
Go deeper
- What are the implications of Frasers' offer for Mulberry?
- How has Mulberry's financial situation changed recently?
- What strategies is Mulberry implementing to recover?
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