Burberry spurned takeover approaches from bigger US rival Coach
A deal would have created a global fashion group with a market value above $20bn
Burberry, the UK’s biggest luxury goods retailer, rejected multiple takeover overtures from US fashion accessories group Coach in recent months, according to people briefed on the matter.
A deal would have created a group with a market value above $20bn, bringing together the US company’s leather goods, handbags and shoemaker Stuart Weitzman with Burberry’s trademark luxury outerwear and global retail footprint.
Talks are no longer active between the companies and that is not expected to change anytime soon after Burberry saw off the interest from its larger rival, these people added. Burberry and Coach declined to comment.
The Coach proposals, which peaked sometime after the summer, were informal and envisaged a cash-and-stock takeover of Burberry. It was unclear at what premium they were made or if Burberry ever engaged in serious talks with the US company.
One of the people following the process closely said Coach might have been more successful if had it acted on its interest in the British company earlier this year.
Burberry shares struggled in the first half of 2016, under pressure from a slowdown in luxury demand from Asia and questions over its leadership. The weakness in sterling after the UK’s vote to exit the EU has also hurt the value of its share price, though it has benefited from an exchange rate boost to its sales in dollars and euros.
Shares in the British fashion group have climbed a third since hitting their lowest level in mid-June to reach £14.11. The company has a market value of £6.2bn and has no debt.
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In July, Burberry said Marco Gobbetti, head of French luxury brand Céline, would become chief executive at the start of next year, replacing Christopher Bailey from the role he held since May 2014. Mr Bailey will remain the company’s chief designer and will add a new role of president when Mr Gobbetti begins.
Its finance director Carol Fairweather was also replaced by Julie Brown, who joined from Smith & Nephew, the UK medical device company. In September, Burberry unveiled a “see now, buy now” at London Fashion Week that allows consumers to buy products immediately after they are shown on the runway.
In an interview with the Financial Times last week, Victor Luis, chief executive of Coach, and designer Stuart Vevers declined to comment on rumours of its interest in Burberry.
However, the duo have been looking to expand Coach’s focus on outerwear, its European and developing market footprint and diversify its brands.
Mr Luis took over as chief executive of Coach in 2014 and helped bring the company back to sales growth after streamlining the business and promoting the brand’s status. Last year, Coach beat competition from rival retailers to acquire women’s luxury shoemaker Stuart Weitzman for $574m to bolster its footwear offering.
Shares in Coach have climbed 11 per cent since the start of the year, taking its market capitalisation to $10.1bn.
Coach was working with three investment banks including independent advisory group Evercore Partners on the situation. Burberry’s advisers included the London-based advisory firm Robey Warshaw.