Frasers Group PLC, the owner of Sports Direct, has made a formal offer to acquire the remaining 63% of shares in Mulberry Group PLC that it does not already own. The move, valued at £52.4 million, is seen as an effort to prevent what Frasers fears could become a “Debenhams situation” for the luxury fashion brand.
The offer, set at 130p per share, places an overall valuation of £83 million on Mulberry. This bid follows Mulberry’s recent announcement of a £10 million equity investment from its largest shareholder, Singapore-based Challice Ltd, alongside a separate £750,000 capital-raising initiative. Frasers, however, has expressed frustration over the proposed Challice investment, criticising Mulberry for a “total lack of engagement” with its shareholders.
Frasers warned that the Challice investment would dilute its stake in Mulberry and described the current position as “untenable” for both Frasers and other minority shareholders. The retail giant added that its takeover offer would result in the cancellation of both the Challice subscription and the proposed capital-raising exercise.
In a statement, Frasers emphasised its confidence in steering Mulberry back to profitability, leveraging its “leading retail expertise and best-in-class distribution capabilities.” The company argued that Mulberry, as a standalone business, faces mounting challenges, including rising operational costs, macroeconomic pressures, and a more selective customer base.
Frasers also voiced serious concerns about Mulberry’s financial stability. In its latest annual report, released on 27 September 2024, auditors flagged a “material uncertainty related to going concern.” Frasers, which currently holds a 37% stake in Mulberry, drew parallels with the collapse of Debenhams, warning it would not allow a repeat of that scenario.
“As a 37% shareholder, Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration,” the company stated.
The Debenhams department store chain, a stalwart of British retail for over 240 years, went into liquidation in 2020 after failed negotiations between its private equity owners and potential buyers. Frasers Group eventually acquired the prime parts of Debenhams’ estate from the administrators, though the brand itself ceased trading.
With the future of Mulberry hanging in the balance, Frasers Group is positioning itself as the best candidate to ensure the iconic British fashion house remains viable in a challenging market.
