Mike Ashley’s Frasers Group has made a £83 million offer to buy Mulberry, a luxury handbag maker facing serious financial problems. This proposal comes as Mulberry deals with challenges that raise concerns about its future in the luxury fashion market.

Key Points:

• Frasers Group has made an £83 million offer for Mulberry at 130p per share.
• The offer was rejected by Mulberry’s board, which believes it doesn’t reflect the brand’s future potential.
• Mulberry reported a £34.1 million loss and declining sales.
• Concerns about the brand’s ability to survive continue to grow.
• Founder Roger Saul suggests LVMH could be a better partner for Mulberry.

Mulberry’s Financial Problems

Mulberry reported a £34.1 million loss for the year ending March 31, down from a £13.2 million profit the year before. The company’s sales have also dropped sharply, with revenues falling 18% in the last 25 weeks as affluent shoppers cut back on spending. To improve its finances, Mulberry plans to raise nearly £11 million.

Frasers Group’s Intentions

Frasers Group already owns 37% of Mulberry and offered 130p per share in its bid. However, Mulberry’s board rejected this offer, saying it does not reflect the brand’s potential for growth. Frasers Group was frustrated to learn about Mulberry’s fundraising plans just before the public announcement. They believe the current situation is not sustainable for minority shareholders and are “exceptionally concerned” about a warning from Mulberry’s auditor that noted “material uncertainty related to going concern.”

Avoiding a Repeat of Debenhams

Frasers Group wants to avoid a situation like that of Debenhams, which collapsed in 2019 after years of poor sales. They do not want Mulberry to face a similar fate.

Founder’s View: A Fit with LVMH

Roger Saul, the founder of Mulberry, believes the brand might be better suited with a larger luxury company like LVMH. He acknowledged that Mulberry has become “too reliant on handbags” and needs to return to its roots. Saul thinks building a brand like Mulberry from scratch would cost hundreds of millions of pounds.

Conclusion: What’s Next for Mulberry?

As this situation unfolds, Frasers Group and Mulberry’s board will need to carefully consider their next steps. Shareholders and consumers are closely watching to see what happens. This takeover bid raises important questions about the future of luxury brands in a challenging market.

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