Burberry shares rise on report of Moncler interest in a bid

There has long been speculation that Burberry could be a takeover target given its vulnerable position as a standalone luxury business plus its sharp share price fall of recent periods.

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Its shares rose over 4% on Monday morning on specific takeover rumours.

And the rumoured potential buyer is? Step forward Moncler. That’s an interesting prospect given Moncler’s previous 2020/21 acquisition of Stone Island and its overall specialisation in outerwear — an area in which Burberry excels via its famous trench coats.

Of course, it’s no surprise that Moncler is staying tight-lipped. It told FashionNetwork.com that “Moncler does not comment on unsubstantiated rumours”. While that’s not an actual denial, it doesn’t have to mean the rumours are true. It’s common for major companies avoid such comment until a deal is ready or simply to say nothing when it turns out that the speculation was way off the mark.

Burberry shares had risen over 7% in trading before the stock exchange officially opened on Monday, although the gains fell back a bit. But 4%+ is nonetheless a big jump in London Stock Exchange terms.

Monday’s rise means the shares are up almost 30% in the past month. But let’s not get carried away — they’re down 26% in six months, nearly 40% in 2024 so far, nearly 50% in the past year and down close to 60% over five years.

With Burberry widely seen as a potential takeover target in recent periods, French luxury giant LVMH had been touted as a business that could be interested in the brand. 

And there have been fresh reports that LVMH chief Bernard Arnault is keen on a deal. So it’s perhaps significant that LVMH has a 10% stake in Double R, the investment vehicle controlled by Moncler CEO Remo Ruffini’s Ruffini Partecipazioni Holding (which has a near-16% Moncler stake). LVMH also has a seat on the Italian firm’s board.

As mentioned, Burberry has been suggested as a takeover target for the past few years with its status as an independent monobrand business increasingly rare in a luxury world dominated by consolidation-hungry luxury groups.

But the firm’s poor performance of late that has driven its share price downwards has seen the speculation reach fever pitch. The company, which has now dropped out of the elite FTSE 100 share index, has a market value of ‘only’ £3 billion based on Monday’s share price. But it was worth three times that figure at one point in spring last year.