Frasers Group has made an offer to acquire Mulberry for £83m, adding to its 37% stake in the luxury handbag firm.

The offer from the Mike Ashley-owned firm comes after Mulberry announced on Friday that it must raise £11m.

In a statement, Frasers said that it has only been aware of these plans "immediately prior to its announcement".

The firm stated: "As highlighted in the subscription announcement, 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 is 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, which first invested in Mulberry in February 2020, said that it would be willing to underwrite the subscription in its entirety, potentially on better terms for the company. The new offer represents a deal worth 130 pence per share.

Head of money and markets at Hargreaves Lansdown, Susannah Streeter, added: "Frasers has already been taking steps to move upmarket, given that its upped stakes in Hugo Boss and its portfolio also includes Savil Row tailor Gieves and Hawkes. Owning Mulberry outright would bolster that plan and would offer a deeper well of finance to help turn the brand’s fortunes around.

"It’s been super tough for Mulberry as, like Burberry, it’s more reliant on aspirational shoppers than the powerhouse names in LVMH rails. Mulberry’s core customers aren’t as insulated as the super-rich from the pressures whipped up in an era of high interest rates and an uncertain economic climate.

"China remains the engine of growth for the luxury sector and those brands not winning the eye of approval from the super-wealthy shoppers in Shanghai, Beijing or Chengdu seem to be faltering. Mulberry is positioned in the middle of the luxury market and has struggled to attach the exclusivity tag."

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