Activist investor’s eye for bargain brings a halt to Burberry plunge
BURBERRY’S freefall on the FTSE 100 came to a sudden halt after Belgian activist investor Alfred Frère seized the opportunity to snap up the fashion house’s shares on the cheap following a two-day plunge induced by its shift in strategy.
Mr Frère raised his stake in the designer from 4pc to 6pc after spooked investors sent its shares spiralling lower on a new upmarket strategy to “sharpen” the brand.
Mr Frère is renowned for cranking up the pressure on boards to improve results and bumped up his stake in the firm through his investment vehicle GBL Energy Sarl, which he controls with Canada’s Desmarais family. The billionaire has helped turn around sportswear giant Adidas in recent years and the stake increase makes GBL the third largest shareholder in Burberry.
After shares rallied to a record high of £19.85 on Wednesday, new chief executive Marco Gobbetti made Burberry out of vogue in one fell swoop the next day. Analysts extended the trench coat maker’s shares plunge into a second day with a slew of downgrades and slashed target prices. UBS analyst Helen Brand told clients in her downgrade to “neutral” that the costs and time to do the restructuring, which will lead to stores in less luxurious locations closing and other sites spruced up, are more than expected.
Burberry plunged 4.6pc in early trade before spiking to a 1pc gain as news broke of GBL’S stake. Bearish sentiment took hold again and it finally settled down 41p, or 2.3pc, at £17.46.
Elsewhere, Bunzl is highly vulnerable to Amazon’s foray into the B2B market, Morgan Stanley warned, sending the blue-chip distribution giant sliding to the bottom of the FTSE 100. Bunzl is more at risk from the online giant flexing its muscles in the sector than French peer Rexel and the two firms could still be wounded in a scrap for market share even if Amazon fails. Some Bunzl shareholders weren’t ready for the fight and the firm dipped 151p to £21.57.
After coming out of Thursday’s global retreat on stock markets largely unscathed, the FTSE 100 suffered worst in Europe yesterday, pulling back 51.11 points to 7,432.99, as the weakness in equities extended into a second day.
Internet of things provider Telit
Communications soared as high as 11pc on City chatter that its Chinese top shareholder is looking to double its current 14pc stake by snapping up shares from institutional investors ahead of a takeover bid. With private equity firms said to also be sniffing around the Tesla supplier, investors piled into the Aim-listed stock lifting it 12.5p to 187p. Defence group Ultra
Electronics nosedived 190p, or 11pc, to £15.27 after a US Department of Justice decision regarding its acquisition of Sparton was delayed until the end of March.
The FTSE 250 firm had expected a verdict by the end of this month and the hold-up for completion of the $234m (£178m) acquisition for the US navy supplier could be extended further, according to Liberum.