Retail tycoon Mike Ashley, who became a significant shareholder in Rangers football club, has suffered another rejection from the luxury handbag maker he wants to add to his burgeoning portfolio.
Mulberry Group dismissed a second takeover approach made by Mr Ashley’s Frasers Group as “untenable” after directors spent days considering it.
The 150p per share indicative offer put a valuation of around £110 million on Mulberry, which has outlets in Glasgow and Edinburgh.
It came after Mulberry spurned a 130p per share unsolicited offer in September.
Mr Ashley has until 5pm on Monday October 28 to decide whether to make a formal offer or walk away.
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He may face an uphill struggle. The fate of Mulberry will be decided by Singapore-based billionaire Ong Beng Seng and his wife Christina, who control a 56% stake in the firm via their Challice business.
Mulberry noted that that two days after Frasers upped its offer, Challice had said it had no interest in selling its shares to the bidder.
However, Frasers said last week that it intended to approach Challice directly.
The group may hope to persuade the Ongs to think again amid the uncertainty affecting the luxury end of the retail market.
Groups such as Mulberry have faced pressure on sales following retrenchment by consumers in response to the surge in inflation fuelled by the recovery from the pandemic and Russia’s war on Ukraine.
In September Mulberry posted a £34m annual loss following a 4% drop in sales, which it said reflected the impact of ongoing macro-economic uncertainty on consumer spending in the luxury retail sector.
The company said conditions had worsened in the second half of the year to March 30, although the rate of inflation dropped following increases in interest rates by the Bank of England.
Mulberry directors have insisted the plans being developed by new chief executive Andrea Baldo can return the business to profitability and drive future growth.
The group said yesterday: “The Board is unanimously of the view that the Possible Offer [by Frasers] is untenable and that the Company should focus its attention on driving the commercial performance of the business.”
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Frasers tried to ramp up the pressure on the Mulberry board earlier this month when it launched a scathing attack on the firm with the notification of its revised indicative offer.
Noting that Mulberry has proposed to raise £10m at 100p per share to support growth, Frasers questioned the board’s claim that its original 130p per share offer failed to recognise the group’s potential.
Frasers claimed then: “There is no current commercial plan, turnaround or otherwise.”
The group added: “Frasers strongly believes it can provide the appropriate insulation and investment to support a much-loved British brand.”
Frasers has shown it can help breathe fresh life into brands amid the challenges posed by pressures on consumer spending and the shift of spending online.
The company has acquired a range of brands in recent years including Gieves & Hawkes and Jack Wills as well as the House of Frasers stores business.
It has a 37% stake in Mulberry.
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Frasers has said it is concerned about the possibility of a repeat of the events that saw Debenhams collapse into administration in 2021 after rejecting an offer of funding from the group.
Mr Ashley developed Frasers out of the Sports Direct business, which he started with a shop in Maidenhead in 1982.
He stepped down as chief executive in 2022 but retains a majority stake in Frasers Group.
Mr Ashley acquired a 9% holding in Rangers after Sports Direct struck a kit supply deal with the club. This ended amid controversy in 2020.
Rangers agreed a kit supply deal with Liverpool-based Castore that year.
Mr Ashley sold the last of his shares in Rangers in 2017 to the Club 1872 syndicate of fans groups and private equity investor Julian Wolhardt.
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Mr Ashley owned Newcastle United from 2007 to 2021, when he sold the club to a group of investors led by Saudi Arabia’s Public Investment Fund.
Mulberry was founded in 1971 in Somerset.
Shares in the group closed down 10%, 12.5p, at 115p.
They sold for 386p in 2021.
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