Rumours are rife of an impending takeover...
Burberry’s market value leapt to over €8 billion yesterday, as moves from an as-yet-unknown investor to increase its stake in the iconic clothing company caused a significant share jump.
The stock rose 6.8% to 1,464 pence, the highest price of London’s day and a five-month high for the company. It placed the value of Burberry, the UK’s biggest producer of luxury goods, at £6.5 billion (€8.4 billion).
The mystery investor’s stake has climbed to 5%, according to reports from custodian HSBC Holdings last month.
Burberry has thus far failed to get HSBC to reveal the identity of the investor with latest reports state that the stake has fallen just under the 5% barrier.
The company has also spoken to advisers at Robey Warshaw as they formulate a plan in the event of a takeover bid.
Whether or not a takeover could prove lucrative remains up for debate, with shares having slid by more than a quarter over the past year, Christmas revenue failing to match predictions, ailing sales in the lucrative Asian markets and forecasts of a drop in earnings for a second year in a row.
Taking Eikon estimates of a 2019 profit of £363 million after tax, the expense of purchasing the world famous trenchcoat maker would garner a mere 5.6% return for their troubles.
Improving sales would be crucial, and tough to do when it comes to Asia.
If this shadowy party is keen on turning around the company’s fortunes, however, Burberry’s lack of a large shareholder would make a sizable offer difficult to turn down.
Speculation in the City of London suggests JAB Holding is the company making the moves. Owned by the Reimann family – German billionaires who put a high price on their privacy – JAB is the largest shareholder in consumer goods heavyweight Reckitt Benckiser, which already controls Jimmy Choo, Belstaff and more.