Mulberry to consider Frasers bid but main shareholder still opposed

Mulberry’s board is considering Frasers Group’s increased takeover bid, despite its biggest shareholder saying it would reject any advances from the Mike Ashley-owned group.
Shares in the struggling British handbag seller rose as much as 20 per cent on Monday morning after its board said it was “working with advisers to consider the company’s position and will provide a further announcement in due course”.
The update came after Challice, Mulberry’s 56.1 per cent shareholder which is controlled by the Singaporean billionaire Ong Beng Seng and his wife Christina Ong, said on Sunday that it had “no interest” in selling its Mulberry shares to Frasers, labelling its advances an unwanted distraction.
Frasers, the Sports Direct and House of Fraser owner which has a 36.8 per cent stake in Mulberry, made an improved offer worth 150p per share on Friday, days after its original takeover approach was shunned. It had previously made an offer worth 130p a share, pitting itself against its rival large shareholder.
The Mulberry board said it would consider Frasers Group’s bid. It has the fiduciary duty to consider all options and do right by shareholders as it attempts to turn around the fortunes of the troubled luxury goods brand.
The board can recommend the Frasers offer to shareholders, but any offer would need the approval of shareholders, including the Ongs, who have majority control over the business.
Challice said on Sunday that it had no intention of accepting an offer, adding that it was an “inopportune time for Mulberry to be sold and [it] particularly regrets the distraction that the possible offer is bringing to the company and its management team at this time.”
Analysts have suggested, however, that Ashley is unlikely to go down without a fight for the business.
Frasers is known for its acquisitiveness and willingness to enter into boardroom battles to wrest control of companies. In the past it has had a number of high-profile battles with rivals such as Debenhams and House of Fraser.
Under City takeover rules, Frasers has a deadline of 5pm on October 28 to announce a firm intention to make an offer for Mulberry or walk away.
Frasers’ takeover interest for Mulberry came after the troubled brand said it needed to raise cash. Mulberry had fallen to a £34 million pre-tax loss in the year to the end of March from a £13 million profit the previous year, with sales down by 4 per cent to £153 million.
The Bath-based leather goods company, which was founded in 1971 and is best known for its Bayswater handbags, has struggled amid the global luxury downturn.
It has insisted, however, that the recent appointment of Andrea Baldo as chief executive, as well as an emergency £10.75 million share placing, provides a “solid platform to execute a turnaround”.
Baldo, who joined on September 1, previously ran the fashion label Ganni and was involved in a turnaround at the Italian streetwear brand Diesel. He took over at Mulberry from Thierry Andretta, who had led the business since 2015 and oversaw a push to take it upmarket.
Frasers said it believed it was “the best steward” to return the brand to profitability, adding that it refused to “accept another Debenhams situation where a perfectly viable business is run into administration”.
Shares in Mulberry were trading up 21p, or 18 per cent, at 133p on Monday morning
A source said the share volumes being traded would be “de minimis” as, together, Challice and Frasers own over 90 per cent of Mulberry’s shares. Sources suggested it was likely to be retail shareholders “taking a punt” on the stock.