Ritika Janiya
In the world of business, there’s always a twist. One moment it seems like a big deal is about to happen, and the next, it falls apart. Recently, Mike Ashley’s Frasers Group, owner of Sports Direct and other big retail brands, decided to walk away from its plans to buy the British luxury handbag brand, Mulberry. This was a big surprise for many, as Frasers already owns 37% of Mulberry.
Let’s dive into what happened and why this is such a big deal in the business world, while also touching on the other market changes that unfolded.
Frasers Walks Away from Mulberry
Frasers Group had been trying to take full control of Mulberry for a while. They made several offers to buy more shares, but Mulberry kept rejecting them. Just recently, Frasers made a final offer to pay 150p per share, valuing Mulberry at around £111 million. However, Mulberry said “no” once again, calling the offer “untenable,” which means they didn’t think it was reasonable or workable.
But why was Frasers so interested in Mulberry? The group, led by Mike Ashley, already owns brands like House of Fraser, Evans Cycles, and luxury streetwear chain Flannels. By acquiring Mulberry, Frasers would have had another luxury brand under its belt, making it a bigger player in the high-end fashion world. Despite its interest, the largest shareholder in Mulberry, Challice, wasn’t having it. Challice, controlled by Singaporean businesswoman Christina Ong and her husband, owns 56% of Mulberry, and with that much control, they could block any deal that didn’t suit them.
Frasers was frustrated with the situation. They expressed concerns over how Mulberry was being run, claiming there was no clear plan for the brand’s future. They also didn’t like that Mulberry’s board was mainly listening to Challice and seemed to ignore other shareholders. Frasers felt left out of important decisions, including a recent emergency cash injection of £10 million that was only discussed with Challice. This was the final straw for Frasers, and they decided to walk away.
Despite stepping back from the deal, Frasers stated that they still support Mulberry as a brand and hope that in the future, they can be more involved in its decision-making process. The result of all this drama? Mulberry’s share price dropped by 8.5%, bringing the company’s value down to £74 million.
Dollar Rallies, Gold Hits Record, and Oil Falls
While the Frasers-Mulberry saga was unfolding, the global financial markets were also seeing some big shifts. The US dollar rallied, rising by 0.3% against a basket of major currencies. This means that the dollar got stronger compared to other currencies, like the British pound. A strong dollar often happens when investors feel confident in the US economy, and right now, they’re betting that Donald Trump could win the upcoming US election. This belief in a stable economic future is making the dollar more appealing to investors.
At the same time, gold prices hit a record high. Why? Because of growing tensions in the Middle East. When there’s uncertainty in the world, investors tend to buy gold as it’s considered a “safe-haven” asset. This means they think it’s a safer place to put their money when things get chaotic. Gold briefly touched $2,752 per ounce but has since dropped slightly to $2,727 per ounce.
Oil, on the other hand, took a hit. Prices dropped by over 2% earlier in the day, and Brent crude, the global oil benchmark, was down by 0.7%, or 54 cents, to $75.51 a barrel. This drop happened after reports showed an increase in US crude oil inventories, meaning there’s more oil in storage than expected. When there’s too much oil and not enough demand, prices tend to fall.
Boeing’s Culture Shift
In other business news, Boeing is going through a tough time. The CEO, Kelly Ortberg, is trying to make big changes to the company’s culture. Boeing has been struggling with strikes, massive debt, and cash shortages. The company lost $6.2 billion between July and September, and its revenue fell by 1% to $17.8 billion. Ortberg is now trying to turn things around by focusing on improving Boeing’s performance in its defense business and fixing problems with its popular 737 Max and 777 aircraft programs.
Ortberg, who took over as CEO in August, is hopeful that a new contract proposal being voted on by striking workers will help stabilize the company. However, analysts aren’t sure if the workers will accept the new deal. Boeing’s future depends heavily on getting back on track, and Ortberg is pushing hard for a “fundamental culture change” to make that happen.
Bank of Canada Cuts Rates
Meanwhile, over in Canada, the Bank of Canada has decided to cut interest rates by half a percentage point, bringing the rate down to 3.75%. This is a big deal because it’s the second rate cut in a short time, and economists are expecting another cut in December. The goal of these cuts is to help boost economic growth by making borrowing cheaper. When interest rates are lower, businesses and consumers can borrow money more easily, which can help stimulate the economy.
Final Thoughts
From Frasers pulling out of its Mulberry bid to big movements in gold, oil, and the US dollar, it’s clear that the business world never sleeps. Companies like Boeing are facing major challenges, while central banks like the Bank of Canada are making big moves to keep their economies afloat. As we keep an eye on these developments, one thing is certain: the business landscape is always changing, and with it, so too are the opportunities and risks that come with it.
