(Bloomberg) -- Mike Ashley’s Frasers Group has offered to buy the whole of Mulberry Group Plc, the British handbag maker, while accusing the company of “a total lack of engagement” as it struggles against a downturn in luxury spending.
Frasers, which already owns 37% of Mulberry, is prepared to pay 130 pence per share for the remaining equity, according to Monday’s non-binding indicative offer, valuing the company at about £83 million ($111 million). Ashley’s business complained that it was not informed of a proposed share issue until immediately before it was published by Mulberry at the end of last week.
“Ashley’s frustration with Mulberry is plain to see,” said Susannah Streeter from Hargreaves Lansdown, a retail investment platform. “Keeping it quiet indicates that the board didn’t want to give Frasers the early option of owning an even bigger chunk of the company.”
Ashley’s retail conglomerate has until Oct. 28 to either make a formal offer or walk away. Mulberry rose more than 4% to 123 pence, yet the shares are still down 40% over the past year.
The company is majority-owned by Singapore’s Ong family and has suffered from a downturn in the global luxury market. It has complained of a particular hit to sales after Britain left the EU and ended a tax break for foreign shoppers.
On Friday, it said it planned to raise more than £10 million from a subscription of shares by Challice, an investment vehicle controlled by the majority shareholder, and a smaller retail offering.
In Monday’s statement, Frasers said it could have underwritten any offering, “potentially on better terms” for the business.
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“Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration,” the statement added.
Ashley, the billionaire founder of Sports Direct, was involved in a protracted and ultimately unsuccessful battle to take over Debenhams, a well-known British department store that collapsed during the pandemic.
Frasers, now run by Ashley’s son-in-law, has sought to grow its premium offerings with upmarket outlet Flannels, as well as stakes in Mulberry and Hugo Boss.
Mulberry appointed Andrea Baldo, the former boss of Ganni, as its chief executive officer in July, replacing Thierry Andretta after almost a decade at the helm. Andretta’s tenure saw a more than 85% decline in the company’s shares as a slowdown in aspirational shoppers hurt profits.
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