Mulberry has rejected an £83m offer from Frasers Group to acquire the firm.

Frasers made an offer for the group yesterday after the luxury handbag brand announced that it was looking to raise £11m in capital on Friday.

The firm said that it had consulted with its financial and legal advisers, as well as its 56.1% majority shareholder, Challice Limited, and believes that the combination of the recent appointment of Andrea Baldo as chief executive officer and its recent subscription and retail offer provides it with a “"solid platform to execute a turnaround".

Furthermore, Mulberry said that the offer from Frasers, which already owns 36.8% of the firm, did "not recognise the company’s substantial future potential value".

Frasers, which first invested in Mulberry in February 2020, said it would be willing to underwrite the subscription in its entirety, potentially on better terms for the company.

However, Mulberry stated that it has "no intention" of withdrawing or terminating the subscription or the retail offer announced on 27 September, believing that the capital raising, which allows all Mulberry shareholders to participate on the same terms, is the "fairest and most effective way of accessing additional equity funds".

Investment director at AJ Bell, Russ Mould, said: "It’s handbags at dawn for Mulberry. Its two major shareholders have different views on who should help the company get back into fashion after a troubled period.

"We’re now in a situation whereby Mulberry has rejected a takeover proposal from Frasers but would happily accept its cash as part of a fundraising exercise to strengthen its finances. Challice doesn’t want Frasers to buy the company and believes Mulberry has the strength to dig itself out of a hole."

Under takeover rules, Frasers, which is owned by Mike Ashley, now has until 5pm on 28 October to make an offer for Mulberry or walk away from the deal.

Mould added: "It’s a bizarre situation where two parties own 92.9% of a quoted business. One has to question why Mulberry needs to remain on the stock market, given the costs associated with listing versus the relatively small size of the company.

"The easy option is for Challice to buy out Frasers at a premium and take Mulberry private, yet Mike Ashley is never one to give things up without a challenge. The fight for Mulberry is as much to do with egos as it is business. Expect more drama to unfold."

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