Are Burberry And Coach Considering A Merger?

The report has caused Burberry shares to rise as much as 5.7 percent

American luxury brand Coach is considering a merger with Burberry, according to new information from financial blog Betaville today. 

Through two unnamed sources, Betaville states that Coach has been working with financial advisers at Evercore for several weeks on a possible deal. 

However, this isn’t the first time rumours of this kind have emerged; earlier this year reports surfaced that Burberry had asked its advisers at investment bank Robey Warshaw to help prepare their defence in the case of a bid.

Today’s news caused Burberry Group Plc shares to rise as much as 5.7 percent this morning, their highest rise since July. 

“Burberry could indeed be seen as the British Coach, as we as analysts had pointed out years ago,” said Luca Solca, head of luxury goods at Exane BNP Paribas, in an email. “Yet, contrary to Coach, most of the efforts at Burberry in the past 20 years have gone in the direction of elevating the brand and moving it into mega-brand price territory, rather than squarely into accessible luxury.

Despite the rise in Burberry’s share prices, Solca believes a merger would not benefit either brand. 

“A merger of Coach and Burberry would primarily be a merger of problems,” Solca said. “M&A history in luxury has shown that mergers don’t obviously help in regaining brand traction and desirability.”

According to Business of Fashion a Burberry spokesperson has declined to comment.

Via Harper’s Bazaar UK