Rumors are circulating about an impending takeover bid for Burberry from the Italian Moncler
- A Miss Tweed article stated that Bernard Arnault ‘would like to see such a deal happen’
- Burberry’s value has fallen significantly over the past eighteen months
Italy’s Moncler is reportedly considering a takeover bid for troubled British luxury icon Burberry.
Fashion website Miss Tweed reported on Monday that Bernard Arnault, who runs the French conglomerate LVMH, was ‘I would like to see such a deal happen’.
LVMH, with brands such as Fendi, Bulgari and Stella McCartney, bought a 10 percent stake in Double R, Remo Ruffini’s investment vehicle and Moncler’s largest shareholder, at the end of September.
Possible suitor: Italian luxury brand Moncler is reportedly considering a takeover bid for iconic but struggling retailer Burberry
Founded in 1952, Moncler started out as a manufacturer of sleeping bags but is best known for its quilted jackets, which are popular with skiers and mountain climbers.
Some analysts have identified Burberry as a prime takeover target as its value has fallen sharply over the past 18 months.
The London-listed company – famous for its trench coats and tartan checks – has suffered falling sales and profits amid a global slump in luxury demand.
Burberry’s business has been particularly hard hit in China, which is teetering on the brink of an economic downturn.
In its latest first-quarter results for the thirteen weeks ending June 29, the company announced that retail sales had fallen 22 percent to £458 million.
Comparable store sales shrank by 23 percent in both the Americas and the Asia-Pacific region, with the latter area in mainland China suffering a decline of 21 percent.
When Burberry announced these results in mid-July, it also announced a profit warning, the suspension of dividends and the departure of CEO Jonathan Akeroyd after just two years leading the brand.
Akeroyd was replaced by Joshua Schulmann, who previously led Michael Kors, Coach, Jimmy Choo and New York department store Bergdorf Goodman.
Since then, Burberry has dropped out of the FTSE 100 Index and seen its share price fall to a 15-year low, making it more attractive for a takeover approach.
Following reports of Moncler’s alleged interest, Burberry shares rose 8 percent in early trading on Monday, before retreating by midday to be 6.4 percent higher at 863.6p.
This is Money asked Burberry if it was in talks with Moncler, but a spokesperson for the brand said: ‘We do not comment on speculation.’
British companies have become attractive targets in recent years due to the weaker pound and a perceived undervaluation relative to global peers.
Cybersecurity giant Darktrace, music rights investor Hipgnosis Songs Fund and energy infrastructure provider Smart Metering Systems all fell into the hands of foreign private equity this year.
Overseas companies have also struck deals to acquire investment platform Hargreaves Lansdown, packaging company DS Smith, computer games company Keywords Studios and Royal Mail owner International Distributions Services.
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