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

US-UK trade deal ‘done’, says Trump as he meets Starmer at G7

Published

on

By

US-UK trade deal 'done', says Trump as he meets Starmer at G7

The UK-US trade deal has been signed and is “done”, US President Donald Trump has said as he met Sir Keir Starmer at the G7 summit.

The US president told reporters: “We signed it, and it’s done. It’s a fair deal for both. It’ll produce a lot of jobs, a lot of income.”

As Mr Trump and his British counterpart exited a mountain lodge in the Canadian Rockies where the summit is being held, the US president held up a physical copy of the trade agreement to show reporters.

Several leaves of paper fell from the binding, and Mr Starmer quickly bent down to pick them up, saying: “A very important document.”

President Donald Trump drops papers as he meets with Britain's Prime Minister Keir Starmer in Kananaskis, Canada. Pic: AP
Image:
President Donald Trump drops papers as he meets with Britain’s Prime Minister Keir Starmer in Kananaskis, Canada. Pic: AP

Please use Chrome browser for a more accessible video player

Sir Keir Starmer hastily collects the signed executive order documents from the ground and hands them back to the US president.

Sir Keir said the document “implements” the deal to cut tariffs on cars and aerospace, adding: “So this is a very good day for both of our countries – a real sign of strength.”

Mr Trump added that the UK was “very well protected” against any future tariffs, saying: “You know why? Because I like them”.

However, he did not say whether levies on British steel exports to the US would be set to 0%, saying “we’re gonna let you have that information in a little while”.

Sir Keir Starmer picks up paper from the UK-US trade deal after Donald Trump dropped it at the G7 summit. Pic: Reuters
Image:
Sir Keir Starmer picks up paper from the UK-US trade deal after Donald Trump dropped it at the G7 summit. Pic: Reuters

What exactly does trade deal being ‘done’ mean?

The government says the US “has committed” to removing tariffs (taxes on imported goods) on UK aerospace goods, such as engines and aircraft parts, which currently stand at 10%.

That is “expected to come into force by the end of the month”.

Tariffs on car imports will drop from 27.5% to 10%, the government says, which “saves car manufacturers hundreds of millions a year, and protects tens of thousands of jobs”.

The White House says there will be a quota of 100,000 cars eligible for import at that level each year.

But on steel, the story is a little more complicated.

The UK is the only country exempted from the global 50% tariff rate on steel – which means the UK rate remains at the original level of 25%.

That tariff was expected to be lifted entirely, but the government now says it will “continue to go further and make progress towards 0% tariffs on core steel products as agreed”.

The White House says the US will “promptly construct a quota at most-favoured-nation rates for steel and aluminium articles”.

Other key parts of the deal include import and export quotas for beef – and the government is keen to emphasise that “any US imports will need to meet UK food safety standards”.

There is no change to tariffs on pharmaceuticals for the moment, and the government says “work will continue to protect industry from any further tariffs imposed”.

The White House says they “committed to negotiate significantly preferential treatment outcomes”.

Mr Trump also praised Sir Keir as a “great” prime minister, adding: “We’ve been talking about this deal for six years, and he’s done what they haven’t been able to do.”

He added: “We’re very longtime partners and allies and friends and we’ve become friends in a short period of time.

“He’s slightly more liberal than me to put it mildly… but we get along.”

Sir Keir added that “we make it work”.

The US president appeared to mistakenly refer to a “trade agreement with the European Union” at one point as he stood alongside the British prime minister.

Mr Trump announced his “Liberation Day” tariffs on countries in April. At the time, he announced 10% “reciprocal” rates on all UK exports – as well as separately announced 25% levies on cars and steel.

Read more:
G7 summit ‘all about the Donald’ – analysis
Scrambled G7 agenda as leaders race to de-escalate Israel-Iran conflict

In a joint televised phone call in May, Sir Keir and Mr Trump announced the UK and US had agreed on a trade deal – but added the details were being finalised.

Ahead of the G7 summit, the prime minister said he would meet Mr Trump for “one-on-one” talks, and added the agreement “really matters for the vital sectors that are safeguarded under our deal, and we’ve got to implement that”.

Continue Reading

Business

Poundland to stop paying rent at hundreds of stores in rescue deal

Published

on

By

Poundland to stop paying rent at hundreds of stores in rescue deal

Poundland will halt rent payments at hundreds of its shops if a restructuring of the ailing discount retailer is approved by creditors later this summer.

Sky News has learnt that Poundland’s new owner, the investment firm Gordon Brothers, is proposing to halt all rent payments at so-called Category C shops across the country.

According to a letter sent to creditors in the last few days, roughly 250 shops have been classed as Category C sites, with rent payments “reduced to nil”.

Poundland will have the right to terminate leases with 30 days’ notice at roughly 70 of these loss-making stores – classed as C2 – after the restructuring plan is approved, and with 60 days’ notice at about 180 more C2 sites.

The plan also raises the prospect of landlords activating break clauses in their contracts at the earliest possible opportunity if they can secure alternative retail tenants.

In addition to the zero-rent proposal, hundreds of Poundland’s stores would see rent payments reduced by between 15% and 75% if the restructuring plan is approved.

The document leaves open the question of how many shops will ultimately close under its new owners.

More on Retail

Follow The World
Follow The World

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

Tap to follow

A convening hearing has been scheduled for next month, while a sanction hearing, at which creditors will vote on the plan, is due to occur on or around August 26, according to one source.

The discounter was sold last week for a nominal sum to Gordon Brothers, the former owner of Laura Ashley, amid mounting losses suffered by its Warsaw-listed owner, Pepco Group.

Poundland declined to comment.

Continue Reading

Business

Israel-Iran conflict poses new cost of living threat – here’s why

Published

on

By

Israel-Iran conflict poses new cost of living threat - here's why

The UK’s cost of living crisis hangover is facing fresh pressure from the Israel-Iran conflict and growing tensions across the Middle East.

Whenever the region, particularly a major oil-producing country, is embroiled in some kind of fracas, the potential consequences are first seen in global oil prices.

The Middle East accounts for a third of world output.

Money latest: ‘Unusual movement’ in house prices

Iran’s share of the total is only about 3%, but it is the second-largest supplier of natural gas.

Add to that its control of the key Strait of Hormuz shipping route, and you can understand why any military action involving Iran has huge implications for the global economy at a time when a US-inspired global trade war is already playing out.

What’s happened to oil prices?

Global oil prices jumped by up to 13% on Friday as the Israel-Iran conflict ramped up.

It was the biggest one-day leap seen since Russia invaded Ukraine in February 2022, which gave birth to the energy-driven cost-of-living crisis.

From lows of $64 (£47) a barrel for Brent crude, the international benchmark, earlier this month, the cost is currently 15% higher.

Iran ships all its oil to China because of Western sanctions, so the world’s second-largest economy would have the most to lose in the event of disruption.

Should that happen, China would need to replace that oil by buying elsewhere on the international market, threatening higher prices.

Please use Chrome browser for a more accessible video player

How the Middle East conflict escalated

How are natural gas prices holding up?

UK day-ahead prices are 15% up over the past week alone.

Europe is more dependent on Middle East liquefied natural gas (LNG) these days because of sanctions against Russia.

The UK is particularly exposed due to the fact that we have low storage capacity and rely so much on gas-fired power to keep the lights on and for heating.

Israel-Iran latest: Tehran threatens to leave nuclear treaty

The day-ahead price, measured in pence per therm (I won’t go into that), is at 93p on Monday.

It sounds rather meaningless until you compare it with the price seen less than a week ago – 81p.

The higher sum was last seen over the winter – when demand is at its strongest.

Please use Chrome browser for a more accessible video player

Aftermath of Iranian missile strike in northern Israel

What are the risks to these prices?

Market experts say Brent crude would easily exceed $100 (£74) a barrel in the event of any Iranian threats to supplies through the Strait of Hormuz – the 30-mile wide shipping lane controlled by both Iran and Oman.

While Iran has a history of disrupting trade, analysts believe it will not want to risk its oil and gas income through any blockade.

What do these price increases mean for the UK?

There are implications for the whole economy at a time when the chancellor can least afford it, as she bets big on public sector-led growth for the economy.

We can expect higher oil, gas and fuel costs to be passed on down supply chains – from the refinery and factory – to the end user, consumers. It could affect anything from foodstuffs to even fake tan.

Increases at the pumps are usually the first to appear – probably within the next 10 days. Prices are always quick to rise and slow to reflect easing wholesale costs.

Energy bills will also take in the gas spike, particularly if the wholesale price rises are sustained.

The energy price cap from September – and new fixed-term price deals – will first reflect these increases.

Read more:
How conflict between Israel and Iran unfolded
UK advises against all travel to Israel
Explosions over Jerusalem as missiles ‘detected’ by IDF

How does this all play out in the coming months?

So much depends on events ahead.

But energy price rises are an inflation risk and a potential threat to future interest rate cuts.

While LSEG data shows financial markets continuing to expect a further two interest rate cuts by the Bank of England this year, the rate-setting committee will be reluctant to cut if the pace of price growth is led higher than had been expected.

At a time when employers are grappling with higher taxes and minimum pay thresholds, and consumers a surge in bills following the ‘awful April’ hikes to council tax, water and other essentials, a fresh energy-linked inflation spike is the last thing anyone needs.

Continue Reading

Trending