Mulberry founder Roger Saul has suggested that French luxury behemoth LVMH could be the right company to step in and aid the struggling brand after it rejected an offer from Mike Ashley’s Frasers group last week.
Saul, who launched the brand in the 70s before leaving in 2002, told This Is Money that Mulberry was “a strong brand” but “too reliant on handbags”.
“The company needs to go back to the spirit of the brand as a whole,” he said.
Saul said that Ashley was a “good retailer” but that he saw a better fit with a European luxury heavyweight like LVMH.
He added that Mulberry already had a good base to profit off: “To build a brand like that from scratch would cost hundreds of millions of pounds,” he added.
Mulberry rejected the Frasers bid as ‘too low’
Mulberry rejected the possible takeover from minority shareholder Frasers Group on the grounds that it didn’t recognise the company’s future value and will not lead the group back to profit.
Frasers announced the possible takeover bid on 30 September after it was snubbed from Mulberry’s £10m capital raise with majority shareholder Challice. It has until the end of the month to launch a formal offer or walk away.
The retail giant, which owns a 37 per cent stake in Mulberry, offered £83m for the rest of the luxury fashion brand, valuing each share at 130p. This was a premium of approximately 11 per cent to the closing share price on 27 September.
Mulberry told markets that this price “does not recognise the Company’s substantial future potential value” and that it has “no intention of withdrawing or terminating the [capital raise]”.
Part of the reason Mulberry launched the capital raise was because it has been struggling with weak demand, and reported a pre-tax loss of £34.1m in 2024, having made a pre-tax profit of £13.2m in 2023.
Mike Ashley’s group added that Mulberry’s “unabating difficulties” were part of the reason it announced the indicative bid.
“Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration,” it said.
In the wake of Mulberry’s rejection of the bid, Frasers raised its stake in the business, buying just under four million shares at 100p per share, increasing its share to 37.3 per cent.
However, it still needs the support of majority shareholder Challice if it wants a bid to succeed.
Could LVMH be the right brand to turn Mulberry around?
LVMH has completed 42 acquisitions in its history, although it has completed only one in 2024 – Swiss clock brand L’Epee 1939 – amid the tough luxury market.
Its smart attitude to mergers and acquisitions is one of the reasons it has grown into such a heavyweight brand. It is now considered a bellwether of the entire luxury fashion industry.
During his tenure, chief financial officer of LVMH Jean-Jacques Guiony described LVMH’s attitude to acquisition as “purely opportunistic”.
“We find a brand that we think we could do something with, so we buy it,” he said.
Examples of successful acquisitions are beauty retailer Sephora in 1998, the iconic Swiss watchmaker TAG Heuer in 1999; the Scottish whiskey distillery Ardbeg in 2004 and the luxury travel giant Belmond in 2019.
It also has a history of successfully rebranding acquisitions: whiskey firm Glenmorangie thrived under its leadership, as did jeweller Tiffany and sandal company Birkenstock.
There’s no question of whether LVMH could afford Mulberry – it did, after all, pay £12.39bn for Tiffany – but it remains to be seen whether LVMH sees the required potential in it.
