Burberry prepares to fend off takeover bid

Burberry
Burberry SS16

Shares in Burberry have jumped 5% to £14.35, valuing the business at £6.4bn, following speculation that the British luxury group could be the subject of a takeover bid by a mystery suitor.

According to the Financial Times, Burberry has asked the bank HSBC (the custodian of the stake) to identify the person or investment vehicle which has built up a stake worth almost 5% in recent weeks, and has alerted its advisers Robey Warshaw and Morgan Stanley to investigate and help fend off a potential take-over bid.

Given that Burberry’s share price has been knocked in recent times – it is down 22% on this time last year, largely due to tough trading in Asia-Pacific – the fact someone is building a significant stake could be seen as an early sign of a take-over bid.

One analyst told the FT that potential suitors might be French luxury house LVMH or American group Coach. “Burberry is one of the few luxury brands without family interest and thus an easier target for acquisition,” Macquarie analyst Daniele Gianera told the FT.

However retail analyst Nick Bubb told The Guardian, he wasn’t convinced a bid was on the cards. “As the so-called ‘mystery’ HSBC stake of around 5% in Burberry has been around for some time and includes their fund management holdings, it is not clear why Burberry are on takeover alert, but the City has taken no chances and pushed the share price up,” he said.