British high-end handbag maker Mulberry Group Plc (AIM:MUL) has rejected Sports Direct-owner and minority shareholder Frasers Group PLC's (LSE:FRAS) offer to acquire the company in full.
In rejecting the offer, which put a premium £83 million valuation on the group, Mulberry’s board said it “does not recognise the company's substantial future potential value”.
Frasers Group, which currently owns a 37% stake in Mulberry, offered to acquire the rest of the company on Monday.
The offer was in response to news that Mulberry’s majority shareholder Challice was entering into a £10 million dilutive equity round in the business.
Frasers expressed surprise and frustration about the proposed Challice subscription, calling it “an untenable position for Frasers and the other minority holders of Mulberry shares”.
A Frasers takeover would have nullified this investment, as well as the £750,000 retail offer concurrently announced by Mulberry.
Mulberry today stated: “The board has no intention of withdrawing or terminating the subscription or the retail offer… believing that the capital raising, allowing all Mulberry shareholders to participate on the same terms, is the fairest and most effective way of accessing additional equity funding.
“Recognising that Frasers is a committed and important investor in Mulberry, and has publicly stated that it would have been willing to underwrite the subscription, the board looks forward to engaging further with Frasers regarding a pro rata participation in the subscription.”