Mike Ashley will struggle to bag Mulberry

Maybe Mike Ashley really would make the ideal owner of Mulberry. Who better than the Sports Direct founder to be presiding over a collection of “soft-yet-sturdy” Islington Bucket handbags: perfect, at just £995 a pop, for carrying around a couple of pints or, in extremis, for providing a luxury alternative to his puking in the pub fireplace routine.
Yet, surely even Big Mike can spot the key problem here. He may have taken a single trackie bottom store in Maidenhead and, since 1982, successfully transformed it into the more upmarket Frasers group, today valued at £3.7 billion. And, he may also be used to getting his own way, thanks to his 73 per cent stake in the business. But, at Mulberry, the shoe is clearly on the other foot.
Despite its 36.8 per cent stake, Frasers is still only a minority investor in the bombed-out luxury goods group. It’s controlled by the Malaysian billionaire Ong Beng Seng and his wife, Christina, via their Challice vehicle, with 56.1 per cent. And they have “no interest” in selling up to Ashley for a proposed 130p a share cash, a mere 11 per cent premium, valuing the group at just £83 million. At that price, why not bank on the turnaround skills of Andrea Baldo, the new boss hired from Danish fashion house Ganni?
True, the claim from the Mulberry board, chaired by Christopher Roberts, that the “possible offer does not recognise the company’s substantial future potential value” sounds like a triumph of hope over experience. The Ongs took control in 2003 after ousting the Mulberry founder Roger Saul. Yet, after some initial success, the shares have plunged from 2012’s £23.20 — even if they did rally 5 per cent to 130p on hopes Ashley may return with a higher bid. Frasers shares fell 2 per cent to 815½p.
Profit warnings have been typical Mulberry fare. Its latest treat for investors was from a similar ilk: full-year results, complete with £34.1 million pre-tax losses, and a £10.75 million cash-call at 100p, snuck out after the market closed last Friday. It was enough to push Ashley into his bid, with Frasers fuming that it was not alerted to the fundraising “until immediately prior to its announcement” — Thursday evening as it happens — despite holding a chunky stake since 2020.
Alarmed that Mulberry’s annual report also included a “material uncertainty related to going concern” statement from the auditor Grant Thornton, Frasers said it “will not accept another Debenhams situation where a perfectly viable business is run into administration”. Yet, as Ashley has frequently proved at Frasers, not least with his random punts on other companies and making his son-in-law Michael Murray chief executive, minority investors have only so much clout.
True, there’s a price for everything. Ong Beng Seng is 80 now and may not want to own Mulberry for ever. Besides, last year he became embroiled in a Sir Keir Starmer-style freebie row in Singapore over alleged gifts received by its transport minister, including tickets to Formula 1 races and West End musicals.
Corruption charges were dropped but the Singaporean authorities are yet to make a decision on Ong. And, perhaps, Ashley’s main aim here is simply to impress on new boss Baldo that Frasers deserves preferential treatment for any Mulberry stock it sells, including via its Flannels stores — or even push the Ongs into buying him out. Still, if he’s serious about a bid, he’ll have to pay a fair bit more to bag Mulberry.
Not for nothing is the Peel Hunt boss Steven Fine a self-styled “glass-half-full type of person”. Yet, even he’s been tested lately by the antics of the Labour government, elected by a landslide on a growth agenda. Why is the PM continually warning of Starmergeddon? And why did the chancellor Rachel Reeves come up with a £22 billion “black hole” that “I’m not convinced is nearly as bad as she’s saying”, he asks?
The result, Fine says, is that “I’ve not seen as much focus on a budget since Nigel Lawson’s in 1987”, where he cut the basic rate of income tax by two points to 27 per cent. In the run-up to this one at the end of the month, Labour has set all kinds of hares running — everything from a crackdown on non-doms to changes to pensions reliefs, capital gains tax and inheritance tax, including potentially hurting the Aim market.
The uncertainty is showing up in the broker’s figures. Peel Hunt says “market activity has slowed again in recent weeks ahead of the upcoming budget and US election”: a contrast to a first half where revenues rose a quarter to £53.3 million, boosted by its role as joint global co-ordinator on the Raspberry Pi float and it now acting for four FTSE 100 clients, JD Sports Fashion, Vistry, Hiscox and Londonmetric Property.
Fine’s hope? That Labour is indulging in classic “expectations management”, throwing political sops to its supporters on the left, before delivering a budget far more benign than feared — and one that won’t scare investors. Anything else would be counterproductive too. Still, as Fine says, he is an optimist.
Some thinking on AI can be far too robotic. So, it was refreshing to hear a nuanced view at The Times Tech Summit from Neil Lawrence, professor of machine learning at the University of Cambridge. The notion that you can impose AI on public services to “fix everything” was, he said, an “absurd and reductionist understanding of the complexities of human intelligence and human society”.
Lawrence is a former director of machine learning at Amazon, so he’s not just some wonk. Still, listen to him and you wonder if it and the other six “Mag 7” AI stocks haven’t got where they are on fuzzier logic.