Mike Ashley’s Frasers Group PLC (GB:FRAS) has set its sights on the British luxury handbag brand Mulberry Group (GB:MUL) and made a conditional offer, valuing it at £83 million. Frasers Group already holds a 37% stake in Mulberry and has raised concerns about the future of the handbag maker. After the announcement, FRAS stock traded down by 2.74% yesterday. On the other hand, Mulberry Group gained 5.53%.
Founded by billionaire Mike Ashley, Frasers Group is a retail company that provides a diverse range of clothing, sportswear, and lifestyle products. Meanwhile, Mulberry is a manufacturer of luxury leather goods specializing in handbags.
Frasers Group Eyes Mulberry Acquisition
Frasers Group is eyeing a full acquisition of Mulberry by buying the remaining 63% stake. This move came after Mulberry announced an emergency $14.4 million share placement last week to strengthen its balance sheet. In recent years, Mulberry has faced difficulties due to rising competition in the luxury market and the overall challenges affecting the sector.
Mulberry released its full-year results for FY24 last Friday, reporting a pre-tax loss of £34 million compared to a £13 million profit in the previous year. Frasers has proposed an offer of 130p per share, representing an 11% premium over Friday’s closing price of Mulberry. Frasers stated it is “the best steward to return Mulberry to profitability.”
With this acquisition, Frasers Group is determined to avoid repeating the Debenhams scenario, where a viable business was driven into administration. Debenhams, in which Frasers had a stake, entered administration in 2019 after years of declining sales.
According to the UK takeover regulations, Frasers has until October 28 to submit a formal offer for Mulberry or withdraw from the bidding process.
What Is the Price Prediction for Frasers’ Stock?
On TipRanks, FRAS stock has been assigned a Strong Buy consensus rating based on three Buy recommendations. The Frasers’ share price target is 1,192.50p, which is 42.2% above the current level.
