Frasers won't be buying Mulberry...for now

By

Sandra Halliday

Published
Dec 17, 2020

Frasers Group may have built up a big stake in luxury leathergoods business Mulberry, but it won’t be making a bid for the firm, even though it had earlier confirmed that it was considering the move.

That news wiped over £15 million off Mulberry’s share price on Thursday. The price dropped more than 11% on investor disappointment that no offer would be forthcoming.

Frasers won’t now make an offer for the firm within six months unless there’s a “material change of circumstances”, unless another bidder emerges or it reaches an agreement with the Mulberry board.

Frasers has built up a stake of around 37% in Mulberry, which is a sizeable holding and one that would usually mean a full takeover attempt.

Under Takeover Panel rules, a stake of 30% or more should see Frasers forced to make an offer for the company that’s listed on the London Stock Exchange. But that rule has been waived in this case because Mulberry’s majority shareholder (a vehicle controlled by Singapore’s Ong family) actually has a larger 56% holding.

The news that Frasers won’t bid has ignited speculation that the reason is because it wants to focus on other bid targets — namely Debenhams and/or Arcadia.

Frasers, under acquisitive CEO Mike Ashley, is known to be interested in Debenhams and has been in intensive talks about buying part of the failed business that has just launched a closing down sale. A development had been expected this week, but no news has been heard on any offer so time could be running out there. Meanwhile, initial bids for Arcadia or its individual brands are due in by Friday (December 18) so Mulberry is perhaps the least urgent of the businesses on Frasers’ radar.