After luxury handbag maker Mulberry rejected a takeover approach from Frasers Group last week, Frasers has today said it would buy about 4 million shares in Mulberry at 100 pence each.
This investment would slightly raise its stake in Mulberry to between 36.9% and 37.3% depending on the outcome of the retail offer, according to Reuters.
This comes just days after Mulberry rejected a takeover approach from Frasers Group, which valued the firm at £83 million.
The struggling British fashion brand said it believes the possible offer from Frasers, which was revealed on Monday, “does not recognise the company’s substantial future potential value”.
Mulberry said it had discussed the approach with its majority shareholder, Singapore-based Challice, which is controlled by billionaire Ong Beng Seng and his wife Christina.
Last week, loss-making Mulberry said that it needed to raise more than £10 million after slumping to a significant loss for the past year.
The luxury fashion firm reported a £34.1 million pre-tax loss for the year to March 31, compared with a £13.2 million profit a year earlier.
It has said sales dropped more sharply over the spring and summer, with group revenues plunging 18% over the past 25 weeks as wealthy shoppers reined in spending.
Within the accounts, Mulberry warned that the downturn has resulted in a “material uncertainty, which may cast significant doubt on the group and parent company’s ability to continue as a going concern” if its struggles continue.
Frasers said it was pushing to take control of Mulberry partly due to these concerns about the long-term viability of the business and to avoid Mulberry becoming “another Debenhams”.
The company said: “Frasers are exceptionally concerned by the audit opinion in the latest annual report released on Friday September 27 2024, which notes a ‘material uncertainty related to going concern’.
“As a 37% shareholder, Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration.”
Frasers has until 28 October to make a formal offer for Mulberry or walk away.
