Fashion

Burberry Slumps After Billionaire Frere Sells 6.6% Stake

Updated on
  • Groupe Bruxelles Lambert raises about $673 million from sale
  • Frere began building investment in trench-coat maker last year

Why Burberry Shares Are Down the Most in Almost Four Months

Burberry Group Plc fell the most in almost four months after billionaire Albert Frere sold his 6.6 percent stake in the trench-coat maker a little more than a year after disclosing an initial investment.

Frere’s Groupe Bruxelles Lambert SA said Wednesday that it expected proceeds of about 498 million pounds ($673 million) from the sale. Burberry shares were sold at 1,805 pence a share, according to data compiled by Bloomberg, 4.2 percent below their closing price on Tuesday. The stock dropped as much as 7.8 percent in London.

Burberry’s shares had climbed 11 percent in the past month, after Chief Executive Officer Marco Gobbetti tapped former Givenchy designer Riccardo Tisci as its creative director in March. Tisci succeeds Christopher Bailey, who is preparing to leave after 17 years, with the new CEO pushing the company in an upmarket direction.

The sale of GBL’s stake “places more doubt on the timing of the brand positioning and turnaround strategy set out by the well-respected CEO,” MainFirst Bank analyst John Guy said in a note.

Albert Frere

Photgrapher: Pascal Le Segretain/Getty Images

GBL said late Tuesday that it was offering the stake in a private placement via Goldman Sachs International. The firm said proceeds from the sale of the stake will help it make new investments.

“This transaction would represent the disposal of GBL’s entire stake in Burberry and be part of the implementation of the group’s portfolio rotation strategy,” Groupe Bruxelles Lambert said.

Burberry declined to comment. GBL’s stake in Burberry was its largest holding in a company in which it doesn’t have a representative on the board.

Frere, a longtime business associate of LVMH CEO Bernard Arnault, disclosed a 3 percent holding in Burberry in February 2017. The investor increased that to 6 percent in November. Groupe Bruxelles Lambert has investments in a range of companies, including Adidas AG and Pernod Ricard SA.

Despite the sale of Frere’s stake, the London-based luxury company continues to offer “one of the most exciting restructuring stories” in the industry, Berenberg analyst Zuzanna Pusz said in a note.

The shares were down 6.6 percent to 1,760 pence as of 9:43 a.m.

— With assistance by Albertina Torsoli, and William Canny

(Updates with placement price in second paragraph.)
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