Mike Ashley’s Frasers Group is weighing a takeover bid for Mulberry after building its stake in the luxury brand to 37 per cent.
The Takeover Panel has granted Frasers a waiver from making a mandatory cash offer, ordinarily triggered once a stake surpasses 30 per cent, because the biggest shareholder, the Singapore billionaire Christina Ong, owns 56 per cent of Mulberry.
Despite this, the panel has insisted that Frasers makes a takeover offer by December 17 or walks away, in what is known as a “put up or shut up” to stop a target company being under siege for a prolonged period.
Frasers increased its stake in Mulberry by buying 5.3 million shares from the Icelandic bank Kaupthing at 150p a share. Mr Ashley’s empire, formerly known as Sports Direct, bought an initial 12.5 per cent stake in the handbag brand in February as part of his attempt to reposition his retail group and boost its relationship with brands.
Michael Murray, Mr Ashley’s son-in-law, is spearheading the so-called “elevation strategy” that has focused on revamping Sports Direct shops and investing heavily in its Flannels luxury boutiques.
Mulberry, founded in 1971, has 119 shops, selling handbags ranging in price from £475 to £1,295. The brand, best known for its Bayswater and Alexa handbags, is also sold in concessions including House of Fraser stores, which Mr Ashley owns.
Two weeks ago, Frasers doubled its stake in Mulberry to 29.7 per cent. Mr Murray said it reflected a “growing relationship” between the two companies and there were plans to promote the brand in Flannels shops.
Frasers acquired a £180 million stake in Hugo Boss this year, adding the German luxury brand to investments in retail such as its ownership of House of Fraser, Jack Wills, Evans Cycles, Sofa.com and Game Digital. It has had stakes in other businesses, including French Connection, Goals Soccer and Debenhams, that have ended disastrously.
Despite the illiquidity of the company’s ownership, Mulberry has been hit by the pandemic and the absence of shoppers in department stores and now has a market capitalisation of only £123.7 million.
In October it reported a 29 per cent fall in sales to £48.6 million and delayed full-year results showed that it had swung to a £14.2 million loss before tax compared to £1 million profit the previous year.
Ms Ong is known as the Queen of Bond Street for the number of shops she owns in the London luxury retail area. She has owned her stake in Mulberry since 2003 when she organised a boardroom coup that ousted Roger Saul, who founded the brand.