Frasers Group increases its stake in Mulberry


Mike Ashley’s Frasers Group, formerly known as Sports Direct, has increased its stake in luxury British handbag company Mulberry. After buying a 12.5% stake in February of this year, it has now risen to 37%.

This signals Ashley’s desire to move his retail empire more upmarket after also investing in German luxury goods group Hugo Boss earlier this year and acquiring the brand Flannels in 2017. The coronavirus pandemic and its resulting lockdowns has significantly impacted Mulberry causing it to cut its workforce and see its share prices decrease. The lockdowns have seen the forced closures of its stores and department stores where its products are sold, reducing in store sales. Significantly for Mulberry, these lockdowns also prevented purchases being made by high-spending tourists as these make up about 10% of the company’s sales. Its digital sales, however, rose by 69% between March and September, with chief executive Thierry Andretta stating that Mulberry’s online strategy was ahead of its rivals in the luxury market.

In a stock exchange update, Frasers revealed that the Takeover Panel waived the usual requirement to make a bid for the entire company when a stake exceeding 30% was acquired. This was because the biggest shareholder, Challice, had a 56% stake. However, Frasers expressed that it was still considering this move saying it was “reserving its right to make a voluntary offer for the company”.

Under the panel’s rules, Frasers Group has until 17th December to announce a formal intention to make an offer for the company.

Commercial considerations:

  • The struggles facing many companies and their decreasing share prices, makes them attractive investments - particularly for figures like Mike Ashley who has continuously been focused on expanding his retail empire.

  • As mentioned, Mulberry has a successful online presence through which sales have increased. Particularly in the current midst of national lockdowns where physical shopping is restricted, this is something retailers will have to focus on to encourage sales.

Legal considerations:

  • We have seen a few M&A deals during this time, for example VF Corp’s planned £1.5 billion acquisition of streetwear brand and retailer Supreme, which should be complete by the end of 2020. It will be interesting to see whether Frasers Group formally announces a desire to make an offer to acquire Mulberry by 17th December and continue this trend in retail M&A activity.


Cassandra is an aspiring solicitor with interests in retail and media, as well as the steps being taken to increase diversity at all levels within the legal sector.

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