Shares in luxury retailer Burberry, a favourite holding of Old Mutual Global Investors’ Richard Buxton, rose 6.4% today on speculation of an upcoming takeover bid, but the FTSE 100 remained in the red in afternoon trading.
The stock, which Buxton bought back into last November despite a set of weak Q3 results, was trading at £14.60 in afternoon trading today.
According to the Financial Times, a mystery investor has built up a stake close to 5% in the luxury firm, prompting speculation the company may be about to be taken over.
The paper reports Burberry has sought help from its financial advisers to defend it against any potential takeover bids, as well as unsuccessfully asking its custodian HSBC to reveal the identity of the mystery investors.
The company, which has seen its market value drop by more than a quarter amid a slowdown in Chinese demand, has reportedly called on its existing bankers at Robey Warshaw for support while its corporate broker, Morgan Stanley, is also looking into the matter.
Analysts have told the FT the firm may be a takeover target for rival luxury goods companies such LVMH, or private equity investors. Its value could be as high as £8bn, or £17 per share, according to analysts at Macquarie.
Despite Burberry’s rally, the FTSE 100 was down 0.25% to 6,166 points after big mining companies came under pressure in response to weak data from China, the world’s largest consumer of metals.
Anglo American was hit the most, falling 9.4% to 569.1p, while Glencore was down 7.6% to 157.8p, and Rio Tinto was down 5.8% to £21.06.
Payment services company Worldpay Group was also hit hard, down 7.8% to 269.2p, following its decision not to pay a dividend despite reporting an 8% gain in full year underlying core earnings.