Rumored Burberry Takeover Temporarily Drives Up Stock

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Burberry Store

An investor decided to put a significant amount of money into Burberry Group and the financial world took notice, driving its stock price up 6.6% on Tuesday as speculation circulated that the luxury group would soon be the target of a “takeover bid or activist investment,” The Wall Street Journal reports.

Well, maybe not. Turns out there is nothing to the rumor and the stock went back down Wednesday—but kudos to anybody who sold Tuesday after it had made its big jump because of the rumor. Reuters noted that it didn’t make a whole lot of sense for the trench-coat maker to be taken over. The brand’s sales aren’t great and it isn’t clear how those numbers could change.

The rumor had started because HSBC had bought enough stock in one blow to equal about 5% of the company, and there was speculation that it was from a single investor. However, the investment actually came from multiple investors.

The rumor was also triggered because the company has had numerous takeover rumors in the past year. The HSBC investment was just more fodder for the gossip mill.

However, Research and Markets reports that the luxury market is expected to grow at a compound annual growth rate of 8.45% by 2019. If that is true, Burberry should do just fine and takeover rumors will be washed away.

Before Burberry knew a multitude of investors were involved, it had requested that HSBC turn over the name of supposed sole investor involved, The New York Times reports.

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