Luxury handbag maker Mulberry has received a takeover approach from Mike Ashley’s Frasers Group.

The offer values Mulberry, which has seen sales fall sharply following a downturn in the luxury sector, at £83m.

Frasers Group, which owns several retailers including Sports Direct, Flannels and Evans Cycles, already holds a 37% stake in the firm.

The proposal deal follows an announcement by Mulberry on Friday that it needed to raise £10m to bolster its finances.

Frasers said on Monday that it had only been made aware of the plan to raise funds “immediately prior to its announcement”.

“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,” it said.

Frasers added that it was also “exceptionally concerned” at an opinion by its auditor in its annual report, published on Friday, which noted there was “material uncertainty related to going concern”.

It said: “As a 37% shareholder, Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration.”

Debenhams went into administration in 2019 after several years of falling sales, with the Covid pandemic being the final blow.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Mike Ashley’s frustration with Mulberry is plain to see.

“Keeping it quiet indicates that the [Mulberry] 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.”

Ms Streeter said Frasers Group had already taken steps to “move upmarket”, such as increasing its stake in Hugo Boss.

In its most recent full-year results, Mulberry revealed a £34.1m pre-tax loss in the 12 months to March compared to a £13.2m profit the year before. Group sales dropped by 4% to £152.8m.