Mulberry Group PLC on Thursday said Frasers Group PLC has subscribed for more shares in the company, days after a spat over a fundraising plan led to the Sports Direct owner announcing a takeover approach for the luxury goods company.

Mulberry said Frasers subscribed for 4.0 million shares at the 100 pence fundraising price under clawback provisions major shareholders were entitled to exercise.

Prior to the fundraise, Frasers owned 22.1 million shares in Mulberry, just under a 37% stake. This deal lifts the retailer’s stake in Mulberry above 37%.

Bath, England-based Mulberry, famous for its handbags, on Tuesday rejected a Frasers takeover approach, after receiving the backing from its majority shareholder.

On Monday, Frasers announced a possible offer that values Mulberry’s shares at 130p each, so its entire equity at £83 million. It would value the chunk of Mulberry that Frasers does not own at around £52 million.

Mulberry said the possible offer from the Sports Direct store chain owner ‘does not recognise the company’s substantial future potential value’.

‘The board believes that the combination of the recent appointment of Andrea Baldo as [chief executive] alongside the recently announced subscription and retail offer provides the company with a solid platform to execute a turnaround and, ultimately, to deliver best value for all Mulberry shareholders,’ the company said in a statement.

Mulberry said it had the support of majority shareholder, Challice Ltd, which holds around 56% of the firm.

Mulberry on Tuesday also said it had no plans to withdraw a fundraise. The cash call had drawn the ire of Frasers, but Mulberry said this week it would engage with the FTSE 100 listing regarding a pro rata participation in the subscription.

The Mulberry fundraise included a subscription of 10.0 million shares by Challice, raising £10.0 million. There is also a retail offer worth £750,000.

Frasers had said on Monday: ‘As a standalone business, the company is facing unabating difficulties. To name a few, rising costs, macro-economic headwinds, and increased selectivity from its discretionary customer base. Frasers are exceptionally concerned by the audit opinion in the latest annual report released on Friday, 27 September 2024, which notes a ’material uncertainty related to going concern’.

‘As a 37% shareholder, Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration.’

Frasers said it did not know about the fundraising plan until ‘immediately prior’ to the Mulberry announcement.

‘As a committed long-term investor in Mulberry, Frasers would have been willing to underwrite the subscription in its entirety, potentially on better terms for the company. Given this total lack of engagement, we believe the status quo to be an untenable position for Frasers and the other minority holders of Mulberry shares,’ Frasers added.

Frasers has until close of business on October 28 to make a firm bid for Mulberry.

Frasers shares fell 0.6% to 806.50 pence each in London on Thursday. Mulberry climbed 7.1% to 135.00p.

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