There’s speculation about Burberry on the morning of November 4, 2024. The group’s shares gained 5% on the London Stock Exchange after specialist media Miss Tweed reported Moncler’s interest in buying the British group.
Burberry, one of Europe’s weakest luxury groups along with Salvatore Ferragamo and Kering, is the subject of takeover rumors by Moncler. It was Miss Tweed who lit the fuse, claiming that a discussion is underway. The very select fashion publication adds that the operation would have received the blessing of Bernard Arnault, CEO of LVMH, who recently invested in Moncler.
Moncler is worth almost 14 billion euros, while Burberry’s market capitalization is down to 3.5 billion euros (2.9 billion pounds). “Burberry is going through considerable difficulties and needs a clear strategic direction and strong leadership. Moncler CEO Remo Ruffini is an accomplished executive with extensive industry experience; he may be able to replicate the success of Moncler’s turnaround at Burberry,” comments Jie Zhang. AlphaValue’s luxury analyst considers the rumor sufficiently credible to have wiped out the discount it imposed on Burberry for its mediocre operating performance.
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At UBS, Zuzanna Pusz is skeptical. She points out that Moncler is still a work in progress, with its previous acquisition, Stone Island, completed in 2020, disappointing. What’s more, the Transalpine group doesn’t have very deep pockets, which would require a combination of cash and shares to complete the project, hence the risk of dilution (which doesn’t seem to be upsetting the market much this morning, as Moncler is not falling, ed. note).
Burberry has regularly been mentioned as a target in the event of sector consolidation. This is all the more true now that the company is suffering. Up until now, rumors have tended to point to larger groups… but valuation levels have become such that it’s not surprising that other players are coming forward.