Burberry placed itself on takeover alert earlier this week after it believed a potential mystery suitor was building a stake in the business. Today it was revealed that HSBC Holdings had amassed the stake itself due to a series of trades and not on behalf of a potential bidder for the business.
Burberry’s shares jumped 5% in value on to £14.35 on 8 March, valuing the business at £6.4bn, following speculation that the British luxury group could be the subject of a takeover bid.
The Financial Times reported that Burberry had asked HSBC Holdings to identify the person or investment vehicle which has built up a stake in the business worth almost 5% in recent weeks, and had alerted its advisers Robey Warshaw and Morgan Stanley to investigate and help fend off a potential take-over bid.
HSBC Holdings has since disclosed that the stake was theirs and they had amassed it over a series of trades and not on behalf of a suitor. The bank is believed to have held a stake in Burberry for quite some time and some industry analysts were puzzled as to why the group had placed itself on takeover alert.
On Tuesday retail analyst Nick Bubb told The Guardian: “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.”
Given that Burberry’s share price had taken a hit in the past 12 months – it is down 22% on this time last year, largely due to tough trading in Asia-Pacific – rumours abounded that the business could be vulnerable to a bid with French luxury house LVMH or American group Coach cited as potential suitors.