Burberry’s chic may lure LVMH
BURBERRY strutted its stuff on the Footsie catwalk as dealers heard revived industry whispers that the luxury goods group, best known for its distinctive camel, red and black check raincoats and scarves, could soon have a new owner.
Already up more than 30pc on the lows it hit a year ago, Burberry shares touched 1825p before closing 49p higher at 1792p on speculation that billionaire Bernard Arnault’s LVMH, the French multinational luxury group, is stalking the London-based group.
Arnault apparently had a good look at Burberry a couple of years ago before walking away, deciding it to be overvalued.
But the urge to merge for LVMH has now become much greater and, as far as some City analysts are concerned, Burberry would fit like an expensive pair of leather gloves.
Broker Berenberg has said Burberry is an obvious target for LVMH or any trade buyer looking to add a British luxury brand with best-in-class digital execution.
Dealers do not rule out a Chinese buyer, as Oriental tourists are mega spenders on unique and extra-exclusive brands.
Burberry has not been in China for long, opening its first store only in 2010 – but LVMH has been selling in the country for more than 20 years.
Any buyer interested in Burberry will have a good look at Wednesday’s full-year sales figures before biting the bullet.
Broker JP Morgan Cazenove expects a 12pc rise in fourth-quarter sales, slightly down on the 15pc attained in the third quarter.
However, it has raised its forecasts for 2016 and 2017 by 5pc because the group is able to pay for materials with bombed-out euros.
The agreed £47bn cash and shares bid for BG Group, up 7p to 1160p, from Royal Dutch Shell, 12.5p better at 2032p, remained a major talking point in dealing rooms. The mega-deal is expected to trigger a retaliatory acquisitive move by BP, 6.4p dearer at 463.7p, as the oil major will now trail miles behind Exxon and a merged BG/Royal Dutch Shell in the industry’s pecking order.
The juicy prospect of more mega takeover activity, and news that Greece did manage to pay its IMF loan instalment on time, helped the Footsie shrug off growing uncertainty about next month’s General Election and close 77.95 points to the good at 7015.36. The FTSE 250 jumped 154.07 points to 17715.54.
As expected, the Bank of England left interest rates on hold at 0.5pc and held the quantitative easing programme at £375bn.
Wall Street traded 70 points lower in the early stages after Federal Reserve minutes published overnight revealed the US Central Bank is very much divided over when it will increase interest rates. It later recovered to close more than 50 points higher.
Several seat- of-your-pants small cap oil exploration stocks, forever popular with kamikaze day traders, struck it rich when AIM-listed UK Oil & Gas, whose chairman is the colourful David Lenigas, said it has made a ‘significant’ oil discovery believed to be the largest onshore find in the UK for 30 years.
Shares of UKOG, which has a 20.36pc stake in the Horse Hill licences, which cover 55 square miles near Gatwick Airport, in Sussex, soared to 4p before closing 1.87p or 169pc higher at 2.98p. The company said the HH-1 well in the Weald Basin has 158m barrels of oil in place per square mile.
That equates to nearly a 100bn barrels of oil from the acreage, although UKOG said only a fraction of it was recoverable.
Other minnows with interest in the Horse Hill licences galloped ahead on blue-sky buying. Alba Mineral Resources surged 129pc to 0.82p, Stellar Resources climbed 47pc to 0.62p, Solo Oil rose 25pc to 0.72p, Evocutis shot up 24pc to 0.26p and Doriemus danced 55pc higher to 0.13p.
Back among the blue- chips, Aberdeen Asset Management rose 19.7p to 485p on reports of a pending upbeat circular. Hopes that mortgage and interest rates will remain at basement levels for some time to come helped housebuilder Persimmon put on 53p to 1733p.
Euromoney Institutional Investor, one of Europe’s largest business and financial publishers, climbed 51p to 1185p as dealers applauded the appointment of Andrew Rashbass, chief executive of the Reuters news division, as executive chairman. He will take over from Richard Ensor, who retires at the end of September.
Buying on the back of a positive pre-close trading update lifted Carclo, the technology-led plastics group, 8.25p to 138p.
Perennial takeover favourite Shanks improved 4.25p to 111p. The waste management company recently reported trading in line with expectations.
Helius Energy closed a fraction dearer at 4.5p. The electricity plants developer sold its stake in Helius CoRDe to Leo Energy for £12.3m and managers are exploring the ‘best way’ to return cash to shareholders. ÷ BUYERS chased Transense Technologies 16pc higher to 1.3p on hearing the company has won a new contract with mining giant BHP Billiton’s Spence copper mine in Chile. Transense will supply its iTrack system using Translogik’s rental price scheme for the entire fleet of 46 large trucks at the mine. Broker N+1 Singer says the contract should provide a steady stream of revenue for Transense, as well as predictable cash flows.