Retailer and brand owner Frasers Group (LON: FRAS) is considering a cash offer for Mulberry (LON: MUL) following the fundraising announced by the brand on Friday. Frasers already owns 37% of AIM-quoted Mulberry and the potential offer is at 130p/share, valuing the company at £83m. The Mulberry share price rose 4.26% to 122.5p.
Frasers highlights the audit opinion that says that there is a “material uncertainty related to going concern”. This shows why Mulberry requires additional funding and it could get into financial difficulties without more cash. Net debt was £23.7m at the end of March 2024.
Frasers says that it was not aware of the fundraising at 100p/share until just before the announcement. It claims that it might have offered better terms to underwrite the subscription and retail offer of up to £10.75m. Frasers is peeved about the lack of interaction with the Mulberry board.
Chalice, which already owns 56.1% of Mulberry, is subscribing for £10m, although there is a right of clawback for certain major shareholders – presumably Frasers. These shares cannot be issued yet because they require shareholder approval, so the initial subscription is for redeemable preference shares in Jersey-based Project HCJ Ltd. They can be swapped for shares in Mulberry. Mulberry can access these funds when it requires them.
The retail offer to minority shareholders could raise up to £750,000 at 100p/share. The closing date is 4 October. The rail offer is dependent on the subscription completing.
A non-binding indicative offer was made by Frasers, which would cost it £52.4m to buy the shares it does not own. However, it cannot gain control unless Chalice accepts the offer.
The conditions include unanimous recommendation by the Mulberry board, plus irrevocable undertakings by the directors and Chalice.
Mulberry fell into loss in the year to March 2024. Even stripping out restructuring and impairment charges, the loss was £22.6m on revenues 4% lower at £152.8m.
In the first five months of the new financial year revenues have declined 18%. Andrea Baldo became chief executive on 1 September.