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Thursday 23 November 2017

Burberry's value tops €8bn amid takeover rumours

Naomi Campbell and Jourdan Dunn burberry spring summer 2015
Naomi Campbell and Jourdan Dunn burberry spring summer 2015

Thomas Mulier

Burberry Group jumped on speculation that the UK's biggest luxury-goods producer is setting up defences against a potential takeover offer in response to stake building.

The stock advanced 6.8pc to 1,464 pence yesterday in London, the day's highest price, boosting the company's market value to £6.5bn (€8.4bn). Other luxury stocks also gained, with shares of Prada up 6.2pc in Hong Kong.

Burberry asked its advisers at Robey Warshaw to help prepare a defence for a possible bid after a mystery investor built up a stake of about 5pc, the 'Financial Times' said, citing sources. The company asked HSBC Holdings, which is the custodian for the stake, to identify the client, though the bank refused, the newspaper said. HSBC reported the stake last month and said on March 4 it dropped below 5pc.

A Burberry representative declined to comment.

Bid speculation is increasing after Burberry shares slid 27pc in the past year. In January it reported Christmas revenue that trailed its own forecast. Burberry is scaling back stores, cutting bonuses and consolidating products under one label after forecasting earnings will probably fall for a second straight year.

"In terms of a takeover target, Burberry's valuation had reached the point where shareholder activism was increasingly likely in our view," said John Guy, an analyst at MainFirst Bank. LVMH and Richemont are two major trade buyers that would have resources to make a bid, while Qataris could figure among private-equity bidders, he said.Burberry shares closed up 4.6pc yesterday. (Bloomberg)

Irish Independent

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