REG - Frasers Group PLC Mulberry Group PLC - Statement on Possible Offer

MulberryAnnouncement

30/09/2024 10:15

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RNS Number : 2315G  Frasers Group PLC  30 September 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS
AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM
INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO
CERTAINTY THAT ANY OFFER WILL BE MADE EVEN IF THE PRE-CONDITIONS ARE SATISFIED
OR WAIVED

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

30 September 2024

POSSIBLE CASH OFFER

by

FRASERS GROUP PLC

for

MULBERRY GROUP PLC

 

1.           BACKGROUND

Further to the announcement made by Mulberry Group plc ("Mulberry" or the
"Company") on 27 September 2024 (the "Capital Raising Announcement") in
relation to, among other things, (i) the proposed subscription for 10,000,000
new ordinary shares in the capital of the Company by Challice Ltd
("Challice"), at a price of £1 per share (the "Subscription Price") (the
"Proposed Subscription"); and (ii) the separate offer to existing shareholders
of the Company of up to 750,000 new ordinary shares at the Subscription Price
(the "Retail Offer"), Frasers Group plc ("Frasers" or the "Group") has taken
quick action to consider and assess the possible options available. As a
significant minority shareholder, owning approximately 37% of the issued share
capital of Mulberry, Frasers was not aware of the Proposed Subscription until
immediately prior to its announcement. Frasers first invested in Mulberry in
February 2020 and grew its holding to approximately 37% that same year. As a
committed long-term investor in Mulberry, Frasers would have been willing to
underwrite the subscription in its entirety, potentially on better terms for
the Company. Given this total lack of engagement, we believe the status quo to
be an untenable position for Frasers and the other minority holders of
Mulberry shares.

Accordingly, having considered carefully the options available to Frasers,
approximately 24 hours post the Subscription Announcement, Frasers submitted a
non-binding indicative offer (the "Proposal") to the Board of Mulberry for the
entire issued and to be issued share capital of Mulberry, not currently owned
by Frasers. Whilst the Board of Mulberry provided a holding response on 29
September, given the accelerated timeframe associated with the Proposed
Subscription and the need to progress the Proposal expeditiously, Frasers
considers their response to be wholly unsatisfactory.

We have long been supportive of the brand and commercial opportunities
available to the Company. With our leading retail expertise and presence, and
best in class distribution capability, we believe Frasers to be the best
steward for returning Mulberry to profitability. 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 are
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.

Accordingly, the Board of Frasers is announcing a possible cash offer by
Frasers for Mulberry, including the principal terms and conditions pursuant to
which Frasers would propose to acquire the entire issued and to be issued
share capital of Mulberry that Frasers does not currently own (the "Possible
Offer").

2.           THE POSSIBLE OFFER

Under the terms of the Possible Offer (the "Possible Offer Terms"), Mulberry
Shareholders would be entitled to receive:

 for each Mulberry Share  130 pence in cash

This implies a valuation of approximately £83 million for the entire issued,
and to be issued, ordinary share capital of Mulberry, or approximately £52.4
million for the entire issued and to be issued share capital of Mulberry that
Frasers does not own, which represents:

·      a premium of 30 per cent to the Subscription Price of 100 pence
per share;

·      a premium of approximately 11 per cent to the closing share price
on 27 September 2024 (being the last business day prior to Subscription
Announcement) of 118 pence per share; and

·      a premium of approximately 22 per cent to the 3-month volume
weighted average price of the Company as of 27 September 2024 of 106.5 pence
per share.

It is proposed that the cash consideration payable by Frasers pursuant to the
Possible Offer Terms would be funded from Frasers existing cash resources. As
reported in the full year results, announced 18 July, Frasers is very well
capitalised with a significant level of cash financial fire power, including a
term loan and RCF with total commitments in excess of £1.4 billon.

3.           PRE-CONDITIONS TO THE MAKING OF ANY FIRM OFFER

The announcement of any firm intention to make an offer for Mulberry by
Frasers under Rule 2.7 of the Code is subject to the satisfaction or waiver of
a number of customary pre-conditions, including, amongst other things (the
"Pre-Conditions"):

 

·      the unanimous and unqualified recommendation of the Transaction
by the Board of Mulberry, supported by its Rule 3 adviser, and such
recommendation not being withdrawn or modified;

·      receipt of irrevocable undertakings from the Directors of
Mulberry, to vote in favour of or accept the offer in respect of their legal
and/or beneficial share holdings, such undertakings, as is customary, to be
binding in the event of a higher competing offer and otherwise in a form
acceptable to Frasers;

·      receipt of an irrevocable undertaking from the Company's largest
shareholder, Challice, to vote in favour of or accept the offer in respect of
their entire holdings, in a form acceptable to Frasers;

·      the termination or the withdrawal of the Subscription and the
Retail Offer;

·      satisfactory completion of a customary focused confirmatory due
diligence exercise on Mulberry; and

·      final approval of the Board of Frasers.

All Pre-Conditions are waivable in whole or in part at Frasers discretion. In
particular, in the event that the Subscription is not terminated or withdrawn
and, notwithstanding that, whether or not a firm offer is made, Frasers
reserve all its rights in relation to the Subscription including, without
limitation, its right to clawback on a pro rata basis as described in the
Subscription Announcement. There can be no certainty that any firm offer will
be made, even if the pre-conditions are satisfied or waived.

4.           OTHER INFORMATION

For the purposes of Rule 2.5(a) of the Code, Frasers reserves the right to
vary the terms of the Possible Offer, including making a firm offer for
Mulberry on less favourable terms than the Possible Offer Terms:

·              with the agreement of the Mulberry Board; or

·              if a third party announces (after the date of
this announcement) a firm intention to make an offer under Rule 2.7 of the
Code or a possible offer under Rule 2.4 of the Code for Mulberry which, at
that date, is of a value less than the value implied by the Possible Offer
Terms; or

·              following the announcement of a Rule 9 waiver
transaction pursuant to the Code, or a reverse takeover (as defined in the
Code).

In addition, Frasers reserves the right to introduce other forms of
consideration and/or vary the mix or composition of consideration of any firm
offer, if made.

In accordance with the Code, Frasers reserves the right to reduce the Possible
Offer Terms by the aggregate amount of any dividend (or other distribution or
return of capital), which is announced, declared, paid or becomes payable by
Mulberry after the date of this letter.

In accordance with Rule 2.6(a) of the Code, Frasers is required, by not later
than 5.00 p.m. (UK time) on 28 October, either to announce a firm intention to
make an offer for Mulberry in accordance with Rule 2.7 of the Code or announce
that it does not intend to make an offer for Mulberry, in which case the
announcement will be treated as a statement to which Rule 2.8 of the Code
applies. In accordance with Rule 2.6(c) of the Code, the above deadline may be
extended further at the request of the Mulberry Board and with the consent of
the Panel. In accordance with Rule 2.6(d), this deadline will cease to apply
if any third-party has announced a firm intention to make an offer for
Mulberry.

This is an announcement falling under Rule 2.4 of the Code and does not
constitute an announcement of a firm intention to make an offer under Rule 2.7
of the Code and there can be no certainty that any firm offer will be made
even if the pre-conditions are satisfied or waived. This announcement does not
constitute an offer for sale of any securities or an invitation to purchase or
subscribe for any securities.

A further announcement will be made if and when appropriate.

Enquiries

 Frasers Group plc
 Chris Wootton (Chief Financial Officer)  +44 344 245 9200

 Robert Palmer (Company Secretary)
 Jefferies International Limited (Sole Financial Adviser to Frasers)
 Philip Noblet                            +44 20 7029 8600

 Ed Matthews

 William Brown

 

Further information

This announcement is not intended to, and does not, constitute or form part of
any offer, invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any securities whether
pursuant to this announcement or otherwise, or the solicitation of any vote in
favour or approval of any offer in any jurisdiction where to do so would
constitute a violation of the laws of such jurisdiction and any such offer (or
solicitation) may not be extended in any such jurisdiction.

This announcement has been prepared in accordance with English law and the
Code, and information disclosed may not be the same as that which would have
been prepared in accordance with laws outside of the United Kingdom. The
distribution of this announcement in jurisdictions outside the United Kingdom
may be restricted by law and therefore persons into whose possession this
announcement comes should inform themselves about, and observe, such
restrictions. Any failure to comply with the restrictions may constitute a
violation of the securities law of any such jurisdiction.

Jefferies International Limited ("Jefferies"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority, is acting
exclusively for Frasers and no one else in connection with the Possible Offer
and shall not be responsible to anyone other than Frasers for providing the
protections afforded to clients of Jefferies, nor for providing advice in
connection with the Possible Offer or any matter referred to herein. Neither
Jefferies nor any of its affiliates (nor any of its or their respective
directors, officers, employees, representatives or agents) owes or accepts any
duty, liability or responsibility whatsoever (whether direct, indirect,
consequential, whether in contract, in tort, under statute or otherwise) to
any person who is not a client of Jefferies in connection with the Possible
Offer, this announcement, any statement contained herein or otherwise.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the
offer period and, if later, following the announcement in which any securities
exchange offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and rights
to subscribe for, any relevant securities of each of (i) the offeree company
and (ii) any securities exchange offeror(s). An Opening Position Disclosure by
a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm
(London time) on the 10th business day following the commencement of the offer
period and, if appropriate, by no later than 3.30 pm (London time) on the 10th
business day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s), save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website
at www.thetakeoverpanel.org.uk, (https://www.thetakeoverpanel.org.uk/)
 including details of the number of relevant securities in issue, when the
offer period commenced and when any offeror was first identified. You should
contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are
in any doubt as to whether you are required to make an Opening Position
Disclosure or a Dealing Disclosure.

Rule 2.4 information

In accordance with Rule 2.4(c)(iii) of the Code, Frasers confirms that it is
not aware of any dealings in Mulberry shares that would require it to offer a
minimum level, or a particular form, of consideration under Rule 6 or Rule 11
of the Code. However, it has not been practicable for Frasers to make
enquiries of all persons acting in concert with it prior to the date of this
announcement in order to confirm whether any details are required to be
disclosed under Rule 2.4(c)(iii) of the Code. To the extent that any such
details are identified following such enquiries, Frasers will make an
announcement disclosing such details as soon as practicable, and in any event
by no later than the time it is required to make its Opening Position
Disclosure under Rule 8.1 of the Code.

Rule 26.1 Disclosure

In accordance with Rule 26.1 of the Code, a copy of this announcement will be
available on Frasers website (www.frasers.group (http://www.frasers.group) )
by no later than 12 noon on the business day following the date of this
announcement. The content of the available website referred to in this
announcement is not incorporated into, and does not form part of, this
announcement

Rounding

Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category may vary
slightly and figures shown as totals may not be an arithmetic aggregation of
the figures that precede them.

Forward-looking statements

This announcement (including information incorporated by reference in this
announcement), oral statements made regarding the Possible Offer, and other
information published by Frasers contain statements about Frasers and Mulberry
that are or may be deemed to be forward looking statements. All statements
other than statements of historical facts included in this announcement may be
forward looking statements. Often, but not always, forward-looking statements
can be identified by the use of forward-looking words such as "targets",
"plans", "believes", "expects", "aims", "intends", "will", "may", "should",
"would", "could", "anticipates", "estimates", "projects" or "strategy" or
words or terms of similar substance or the negative thereof. Forward looking
statements include statements relating to the following: (i) future capital
expenditures, expenses, profits, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy, losses and
future prospects; (ii) business and management strategies and the expansion
and growth of the Company operations and potential synergies resulting from
the Possible Offer; and (iii) the effects of government regulation on the
wider Frasers group or the wider Mulberry group's business.

These forward-looking statements are not guarantees of future performance.
Such forward-looking statements involve known and unknown risks and
uncertainties that could significantly affect expected results and are based
on certain key assumptions. Many factors could cause actual results to differ
materially from those projected or implied in any forward-looking statements.
These factors include, but are not limited to, the satisfaction of the
conditions to the Possible Offer, as well as additional factors, such as
changes in political and economic conditions, changes in the level of capital
investment, retention of key employees, changes in customer habits, success of
business and operating initiatives and restructuring objectives, impact of any
acquisitions or similar transactions, changes in customers' strategies and
stability, competitive product and pricing measures, changes in the regulatory
environment, fluctuations of interest and exchange rates, the outcome of any
litigation. Due to such uncertainties and risks, readers are cautioned not to
place undue reliance on such forward-looking statements, which speak only as
of the date of this announcement. All subsequent oral or written
forward-looking statements attributable to Frasers or Mulberry or any of their
respective members, directors, officers or employees or any persons acting on
their behalf are expressly qualified in their entirety by the cautionary
statement above. Frasers disclaim any obligation to update any forward-looking
or other statements contained in this announcement, except as required by
applicable law.

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