Frasers Group PLC on Friday announced an improved offer to acquire luxury leather goods firm Mulberry Group PLC, of which it owns 37%, following Mulberry’s rejection of a previous approach last week, but Mulberry’s majority shareholder rejected the new bid as well.

On Friday after the London market close, Frasers revealed a revised bid of 150 pence per share, higher than the 130p offer made before. Mulberry shares had ended 3.2% higher at 113.50p prior to the announcement. Frasers closed 0.3% higher at 811.00p.

The initial offer was rejected by Mulberry with the support of 56.4% shareholder Challice Ltd, and Challice on Sunday said it doesn’t support the latest offer either.

‘Challice has no interest in either selling its Mulberry shares to Frasers or providing Frasers with any irrevocable or other undertaking with regards the possible offer,’ it said.

The revised offer is the latest chapter in a tussle between retailer Frasers and the Bath-based fashion group, after struggling Mulberry launched an equity raise last week, of which Frasers said it wasn’t given enough notice.

Under the equity raise, Frasers subscribed for 4.0 million shares, edging its stake in Mulberry up to 37.3% from 36.9%. The 100p equity raise price was lower than the 130 pence per share acquisition offer.

‘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 had said in reaction to the fundraise.

The Sports Direct owner on Friday added to its criticism of Mulberry’s rejection of the offer, the subsequent equity raise as well as the ‘limited engagement it has been able to arrange with representatives of Mulberry following the initial proposal’.

‘Frasers is clear that there is no current commercial plan, turnaround or otherwise,’ the company said, noting it has ‘significant reservations that the £10 million raised under the subscription will be enough to support the business through the near to medium term’.

‘It is Frasers’ belief that this will lead likely to another capitalisation event within that timeframe unless there is immediate and very real change at the company,’ it added.

The 150 pence offer by Fraser is a 50% premium to the subscription price, 28% higher than Mulberry’s 118 pence closing share price on September 27 prior to the subscription announcement, and a 40% premium on the 3-month volume weighted average price of 107 pence at September 27.

‘Despite the above, Mulberry’s catastrophic results, its necessity for emergency funding and difficult market backdrop, Frasers strongly believes it can provide the appropriate insulation and investment to support a much-loved British brand,’ the company said.

‘As part of the Frasers portfolio, the Mulberry brand would be provided with the platform to ensure its long-term survival and success. That is why, as announced on October 4, Frasers participated in the subscription for 4.0 million Mulberry shares at the subscription price; and why it made the initial proposal and the revised proposal,’ it added.

Mulberry’s majority shareholder said it disagrees with Frasers’ assessment, while acknowledging that Frasers has been a ‘supportive minority Mulberry shareholder’.

‘Challice is very supportive of the company and its current management team, as proven by the guarantees it gave with regards the subscription, and believes in the long term value of the Mulberry brand,’ it said.

‘Challice believes that it is an inopportune time for Mulberry to be sold and particularly regrets the distraction that the possible offer is bringing to the Company and its management team at this time.’

It added: ‘Challice hopes that by making its position clear, Frasers will be encouraged to announce that it does not intend to make an offer for Mulberry.’

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