Is Burberry about to be taken over? Some investors sure seem to think so.
Burberry Group PLC picked up 6 percent this morning as rumors spread that the more than century-and-a-half old British luxury firm might soon find itself on the receiving end of a takeover bid, or some activist investor affection.
Shareholder disclosure recently turned up the surprising revelation that an undisclosed investor had briefly grabbed up more than 5 percent of shares in Burberry. Burberry had asked for disclosure of the investor from the custodian, HSBC holdings, but as of yet has gotten no response. They will likely have to get one, as U.K. market rule forces any investor with more than 5 percent of a firm to reveal themselves if asked by the target firm. Burberry expects to get more details from HSBC in coming days, according to a Wall Street Journal source.
HSBC declined to comment.
Burberry is in discussions about the stake with investors Morgan Stanley and Robey Warshaw.
Robey Warshaw is a notable addition to this story since the London-based firm is a boutique that pretty much does one thing: fights takeovers.
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The stake since crossing the 5 percent line, triggering a disclosure, has dropped below since March 1, according to the filings.
Burberry shares went up on the news, but remain well below where they were a year ago.
Analysts and investors are looking at foreign sovereign funds or a private-equity firm as the likely buyers in the event of a takeover — as European luxury competitors in the same market space face similar market pressures to Burberry and don’t have deep enough pockets to make it happen.
Burberry’s recent issues have recently been driven largely by the slowdown in the Chinese economic engine, as China is the firm’s largest and fastest growing market. China and Hong Kong hold the balance of Burberry’s stores — and sales have suffered. They have few stores in Europe (other than the U.K) and Japan.
Big changes are expected out of the announcement of full-year results in May, and not too soon it seems. Shares are down 7.7 percent, other than the recent takeover noise motion, since Christopher Buckley ascended to CEO. Rival firm Kering’s shares have climbed 2.1 percent over this period while LVMH’s have jumped 21 percent
