Connect with us

Published

on

Mike Ashley’s sprawling retail empire Frasers Group has revealed a takeover bid for Mulberry, the struggling luxury brand, claiming it wants to save the company from a potential Debenhams-style collapse.

Frasers, which already owns 37% of Mulberry’s shares, said it had made a non-binding approach for the stock it does not already hold.

Its 130p-per-share offer values Mulberry at £83m.

Money latest:
Top chef reveals his fried chicken recipe – and you can make it for cost of KFC

It represented an 11% premium on Friday’s closing price, Frasers said.

Earlier that day, Mulberry had announced a move to raise cash through the sale of 750,000 new shares to existing shareholders, priced at £1 each, after slumping to a £34.1m loss over its last financial year.

It also sought to raise £10m through a so-called subscription offer by its majority shareholder Challice.

The Somerset-based firm, best-known for its handbags, has been suffering amid weak demand for luxury globally.

There is no suggestion it is at any immediate risk of collapse but its accounts contained a warning that the downturn had resulted in a “material uncertainty which may cast significant doubt on the group and parent company’s ability to continue as a going concern” if it persisted.

Mulberry opened a new store in Dubai Mall in April as part of its international expansion plans. Pic: Mulberry
Image:
Mulberry opened a new store in Dubai Mall in April as part of its international expansion plans. Pic: Mulberry

Frasers said: “Frasers are exceptionally concerned by the audit opinion in the latest annual report released on Friday September 27 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 had held a stake in Debenhams worth £300m at one stage but its holding was wiped out in 2019 when it collapsed in April of that year.

Frasers, which is best known for its Sports Direct and Flannels brands, is 73%-owned by Mike Ashley’s MASH Holdings vehicle but now run by his son-in-law Michael Murray.

Please use Chrome browser for a more accessible video player

July: Frasers boss Murray outlines strategy

Frasers owns more than 40 consumer names including House of Fraser, Game, Evans Cycles, Jack Wills, Gieves & Hawkes and Agent Provocateur.

Its sports equipment and sports and leisurewear interests include Slazenger, Sondico, No Fear, Donnay, Everlast and Karrimor

In more recent times it has built large stakes in the likes of ASOS and Boohoo and acquired commercial property including a number of shopping centres.

Mr Murray told Sky News in an interview this summer that its elevation strategy – taking the company up-market – remained on track despite the immediate challenges facing the luxury sector, hurt by falling demand particularly in key growth areas such as China.

Read more from Sky News:
UK’s biggest steelworks to cease production
UK becomes first G7 nation to exit coal-fired power
Telegraph ownership transfer completed ahead of £500m sale

Shares in Frasers were trading more than 2% down on the day in the wake of its approach.

Those of Mulberry were 6% higher at 125p, reflecting the 130p-per-share value Frasers had placed on the stock.

Mulberry was yet to comment on Frasers’ move, which is subject to its board’s recommendation and the withdrawal of the subscription offer.

Under UK takeover rules, Frasers has until 28 October to make a firm offer for Mulberry or walk away.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said of the situation: “Mike Ashley’s frustration with Mulberry is plain to see. The offer to buy the beleaguered handbag maker, comes after it unexpectedly announced a plan to raise emergency funds, which also took Frasers Group by surprise.

“Keeping it quiet indicates that the board didn’t want to give Frasers the early option of owning an even bigger chunk of the company. However, investors may also be losing patience, given that Mulberry’s shares have fallen by 52% over the past year.”

Continue Reading

Business

IMF upgrades UK economic growth forecast – but issues tariffs warning

Published

on

By

IMF upgrades UK economic growth forecast - but issues tariffs warning

The UK economy will grow more than previously thought, according to the International Monetary Fund (IMF), which has upgraded its latest forecast.

It also said the Bank of England should “continue to ease monetary policy gradually”, indicating it expected further reductions in interest rates.

But it warned trade tensions linked to US tariff plans will reduce UK economic growth next year.

The Washington-based UN financial agency said the UK economy will expand 1.2% this year and “gain momentum next year”.

The upgrade in forecasts, however, is slight, up from an expected 1.1% announced in April as the world reeled from the global trade war sparked by US President Donald Trump’s tariffs.

That April figure was a 0.5% downgrade from the projected 1.6% growth for 2025 the IMF foresaw in January and the 1.5% forecast issued in October.

It means the IMF expects the UK economy to grow less this year than it forecast in October and January.

Money blog: Britons face 100% property tax in Spain

Tariffs warnings

This anticipated lower growth is largely due to tariffs – taxes on goods imported to the United States – and the uncertainty caused by shifting trade policy in the US, the world’s largest economy.

While many tariffs have been paused until 8 July, it’s unclear if deals will be in place by then and if pauses may be extended.

The effect of this has been quantified as a 0.3 percentage points lower growth by 2026 in the UK, the IMF said.

The organisation held its prediction that the UK economy will grow by 1.4% in 2026.

“The forecast assumes that global trade tensions lower the level of UK GDP by 0.3% by 2026, due to persistent uncertainty, slower activity in UK trading partners, and the direct impact of remaining US tariffs on the UK,” it said.

Please use Chrome browser for a more accessible video player

Trump’s tariffs: What you need to know

It comes despite the UK having agreed a deal with the Trump administration to circumvent the 25% tariffs on cars and metals.

The IMF also cautioned that “weak productivity continues to weigh on medium-term growth prospects”.

Lower productivity has been an issue since the global financial crash of 2008-2009, but has been caused by “chronic under-investment”, low private sector research and development, limited access to finance for businesses to expand, skill gaps, and a “deterioration in health outcomes”, it said.

Interest rates

Interest rates “should” continue to come down, making borrowing cheaper, though the IMF acknowledged rate-setters at the Bank of England now have a “more complex” job due to the recent rise in inflation and “fragile” growth.

The author of the report on the UK, Luc Eyraud, said the IMF expected the Bank to cut interest rates by 0.25 percentage points every three months until they reach a level of around 3%, down from the current 4.25%.

Praise was given to the UK government as the IMF said “fiscal plans strike a good balance between supporting growth and safeguarding fiscal sustainability”.

“After a slowdown in the second half of 2024, an economic recovery is under way,” the IMF said.

Global factors – “weaker export performance in the challenging global environment” – are blamed for the slowdown last year.

Follow The World
Follow The World

Listen to The World with Richard Engel and Yalda Hakim every Wednesday

Tap to follow

The news is being taken as a win by Chancellor Rachel Reeves.

“The UK was the fastest growing economy in the G7 for the first three months of this year and today the IMF has upgraded our growth forecast,” she said.

“We’re getting results for working people through our plan for change – with three new trade deals protecting jobs, boosting investment and cutting prices, a pay rise for three million workers through the national living wage, and wages beating inflation by £1,000 over the past year.”

Continue Reading

Business

What is the two-child benefit cap and will Labour scrap it?

Published

on

By

What is the two-child benefit cap and will Labour scrap it?

The government is considering getting rid of the two-child benefit cap first brought in by the Conservatives.

The policy has caused considerable consternation within the Labour Party, with a growing number of MPs calling to scrap it and ministers so far refusing to.

Farage says he can be PM – politics latest

But now, Education Secretary Bridget Phillipson has given the government’s strongest hint yet it may scrap the cap after she told Sky News ministers are “considering” lifting it.

We look at what the cap is and the controversy over it.

What is the two-child benefit cap?

Since 2017, parents have only been able to claim child tax credit and universal credit for their first two children, if they were born after April 2017.

An exception is made for children born as a result of rape.

Please use Chrome browser for a more accessible video player

Child benefit reform ‘not off the table’

Who introduced it?

Then work and pensions secretary Iain Duncan Smith first proposed the policy in 2012 under the Conservative-Liberal Democrat coalition government.

It was not until 2015 that then chancellor George Osborne announced a cap would be introduced from the 2017/2018 financial year.

The coalition said it made the system fairer for taxpayers and ensured households on benefits faced the same financial choices around having children as those not on benefits.

Read more:
Why PM’s Reform strategy may backfire
Winter fuel U-turn could have big consequences

David Cameron on the 2015 campaign trail
Image:
David Cameron’s government introduced the cap, though he was out of office by the time it came in

What is Labour’s position on the cap?

The party has long been divided over the issue, with Sir Keir Starmer ruling out scrapping the cap in 2023.

He then said Labour wanted to remove it, but only when fiscal conditions allowed.

Following Labour’s landslide victory last July, the prime minister refused to bow to pressure within his party, and suspended seven MPs for six months for voting with the SNP to scrap the cap.

Ministers have toed the party line for months, but the narrative started to shift in May, with Sir Keir reported to have asked the Treasury to see how scrapping it could be funded.

The publication of Labour’s child poverty strategy was delayed from the spring to autumn, fuelling speculation the government wants to use the next budget to scrap the cap.

Then the education secretary told Sky News on 27 May lifting the cap is “not off the table” – and “it’s certainly something that we’re considering”.

Please use Chrome browser for a more accessible video player

Why did Labour delay their child poverty strategy?

How many children does the cap affect?

Government figures show one in nine children (1.6m) are impacted by the two-child limit.

In the first three months Labour were in power, 10,000 children were pulled into poverty by the cap, the Child Poverty Action Group found.

In May, it said another 109 children are pulled into poverty each day by the limit, adding to the 4.5 million already in poverty.

The Resolution Foundation said the cap would increase the number of children in poverty to 4.8 million by the next election in 2029-30.

Torsten Bell, the foundation’s former chief executive and now a Labour Treasury minister, said scrapping the cap would lift 470,000 children out of poverty.

Torsten Bell.
Pic: Dimitris Legakis/Athena Pictures/Shutterstock
Image:
Torsten Bell has warned against keeping the cap. Pic: Dimitris Legakis/Athena Pictures/Shutterstock

How much would lifting the cap cost the taxpayer?

The cap means for every subsequent child after the first two, families cannot claim benefits worth £3,455 a year, according to the Institute for Government.

It estimates removing the limit would cost the government about £3.4bn a year – equal to roughly 3% of the total working-age benefit budget.

It is also approximately the same cost as freezing fuel duties for the next parliament.

Research has found the indirect fiscal impacts of lifting the cap could be higher, as some data shows investing in young children can pay for itself by causing better outcomes for them later in life.

Continue Reading

Business

Donald Trump says he will postpone 50% tariffs on EU until July

Published

on

By

Donald Trump says he will postpone 50% tariffs on EU until July

Donald Trump says he will delay the imposition of 50% tariffs on goods entering the United States from the European Union until July, as the two sides attempt to negotiate a trade deal.

It comes after the president of the European Commission, Ursula von der Leyen, said in a post on social media site X that she had spoken to Mr Trump and expressed that they needed until 9 July to “reach a good deal”.

The US president had last Friday threatened to bring in the 50% tariffs from 1 June, as European leaders said they were ready to respond with their own measures.

But Mr Trump has now said that date has been put back to 9 July to allow more time for negotiations with the 27-member bloc, with the phone call appearing to smooth over tensions for now at least.

Speaking on Sunday before boarding Air Force One for Washington DC, Mr Trump told reporters that he had spoken to Ms Von der Leyen and she “wants to get down to serious negotiations” and she vowed to “rapidly get together and see if we can work something out”.

The US president, in comments on his Truth Social platform, had reignited fears last Friday of a trade war between the two powers when he said talks were “going nowhere” and the bloc was “very difficult to deal with”.

Mr Trump told the media in Morristown, New Jersey, on Sunday that Ms Von der Leyen “just called me… and she asked for an extension in the June 1st date. And she said she wants to get down to serious negotiation”.

More on Donald Trump

“We had a very nice call and I agreed to move it. I believe July 9th would be the date. That was the date she requested. She said we will rapidly get together and see if we can work something out,” the US president added.

Follow the World
Follow the World

Listen to The World with Richard Engel and Yalda Hakim every Wednesday

Tap to follow

Shortly after, he wrote on Truth Social: “I agreed to the extension – July 9, 2025 – It was my privilege to do so.”

On his so-called “liberation day” last month, Mr Trump unleashed tariffs on many of America’s trade partners. But since then he’s backed down in a spiralling tit-for-tat tariff face-off with China, and struck a deal with the UK.

Read more from Sky News:
Gail’s backer plots rare move with bid for steak chain Flat Iron
AA owners line up banks to steer path towards £4.5bn exit

Please use Chrome browser for a more accessible video player

12 May: US and China reach agreement on tariffs

Much of his most incendiary rhetoric on trade has been directed at Brussels, though, even going as far as to claim the EU was created to rip the US off.

Responding to his 50% tariff threat, EU trade chief Maros Sefcovic said: “EU-US trade is unmatched and must be guided by mutual respect, not threats.

“We stand ready to defend our interests.”

Continue Reading

Trending