Mike Ashley’s Frasers Group has dropped plans for a £111 million takeover offer for luxury handbag maker Mulberry.

The group said it had decided not to make a firm offer ahead of Monday’s bid deadline in light of Mulberry’s rejection of its latest sweetened approach and “in the absence of proper engagement from the Mulberry board”.

Mulberry’s shares dropped 7% after the announcement.

Frasers urged Mulberry to provide a “credible” plan soon and raised worries over the governance of the fashion firm, which is majority owned by Challice – a group controlled by Singaporean entrepreneur Christina Ong and husband Ong Beng Seng.

The Sports Direct owner, which already owns a 37% stake in Mulberry, is pushing for an appointment to the company’s board and said it hopes for “fuller engagement with both Mulberry and Challice on a range of topics”.

On Tuesday, Mulberry dismissed the improved 150p-a-share approach from Frasers as being “untenable”.

The London-listed company, which has two factories in Somerset, said its board had decided to rebuff the higher proposed takeover in favour of focusing on boosting its business performance.

It said this also took into account the view Challice, which had already rejected the approach, saying it did not plan to sell to Frasers.

Frasers said the rejection was a “disappointing outcome”, but stressed it “remains a long-term supporter of the well-loved British brand”.

However, it added: “Frasers continues to believe that market headwinds, and a clear lack of commercial plan, place the company in a very difficult financial position.

“Frasers welcomes the presentation of a credible plan in the near term.

“Frasers also remains concerned about the governance of Mulberry, and in particular, would not like to see another scenario where the board chooses to exclusively engage with Challice in private on significant matters, such as the emergency subscription of £10 million announced on 27 September.”

Frasers tabled its higher approach on October 11, following a previous 130p-per-share move valuing Mulberry at £83 million, which was rebuffed earlier this month.

Frasers has been increasing its luxury business in recent years, including building up its stake in Hugo Boss and Mulberry.

But the takeover plans came after Mulberry’s shares had dropped sharply amid a global slowdown in the luxury consumer market due to inflation pressures hitting wealthy shoppers.

Mulberry shares are down more than 40% over the last 12 months.

Frasers said that given its significant shareholding, it “now hopes the board will engage positively on a Frasers appointee to the Mulberry board, a request that has been made several times in recent history”.