Burberry Reportedly Wants No Part of $20 Billion Merger With Rival Coach

U.K. luxury powerhouse brand Burberry has reported fended off several buyout attempts by U.S.-based fashion group Coach Inc., the Financial Times reported Sunday.

Citing sources briefed on the situation, the Financial Times said talks are no longer active between the companies and that the outcome is not expected to change into the immediate future.

Reports surfaced in October suggesting that the two fashion firms were considering a merger that would create an entity with a market value of $20 billion. At that time, Reuters quoted sources familiar with the matter as saying that the companies were not in active talks.

At the height of the speculation, experts gave mixed reviews on the scenario with Exane BNP Paribas managing director Luca Solca, calling it a potential “merger of problems” in October. (Exane BNP Paribas is a financial services firm with offices in Paris, New York and London.)

“There would be little or no synergies to speak of — while problems would compound … My view is that this is likely to be a red herring,” Solca said.

Nevertheless, the M&A chatter sent Burberry shares — which had hit their lowest levels in June — climbing in October.

Burberry — which saw its profits slump 40 percent in the first half — announced in July that it had tapped Marco Gobbetti to replace Christopher Bailey as CEO as it continues to try to make good on a turnaround plan. (Gobbetti will take the helm in 2017. Bailey, who has held the dual role of chief creative and CEO since May 2014, will retain his creative title and take on the new one of president.)

Meanwhile, Coach Inc. — which also owns the Stuart Weitzman label — had struggled with overall softness in the handbag sector in 2015 but appeared to gain some grounds with its turnaround efforts this year.

In the most recent quarter, reported in November, the New York-based company said its Q1 net income advanced 22 percent year-over-year, to $117 million, while sales increased 1 percent, to $1.04 billion.

As of noon ET, Coach’s shares were up 3 percent, to $37.44.

Burberry’s stock ended the London trading day up 1.9 percent.

Both Coach and Burberry declined to comment.

imbox Sponsored

Customer Experience, Revenue Stream and Sustainability Come Wrapped in an IMBOX

Sustainable, footwear protection technology company, IMBOX Protection, is bringing its in-store service to the U.S. market for increased foot traffic and basket size with a new revenue stream.
Learn More

Access exclusive content