the Insiders


March 8, 2013 5:30 PM

The Big-Time Buyout Rumor Is Back

Investors are ready to believe again -- if only for a moment -- in the big-time buyout rumor....

Investors are ready to believe again -- if only for a moment -- in the big-time buyout rumor.

The scene is set, perhaps not as perfectly as it was in the heyday of 2005 but as well is it probably could be today. Stocks are strong. Wall Street is at its all-time high. There have been a number of big deals, including Warren Buffett's $23 billion deal with 3G Capital to buy H.J. Heinz. 

And, importantly, it's relatively easy right now for big players to borrow tons of money on the cheap. (Never mind that that's so because the economy is still very weak and the Federal Reserve is worried higher interest rates could hobble or cripple the delicate recovery. People are ready to believe.) 

There's big money both in big-time deals and big-time rumors -- especially if you happen to start the rumor, which is sleazy if you know it's not true. 

For whatever reason, it's a trend that's found its way to fashion. 

Bloomberg recently reported that LVMH Moët Hennessy Louis Vuitton was "poised to pursue a takeover," with analysts suggesting the luxe giant could go after Burberry Group or Tiffany & Co. 

And Coach Inc. was said to consider selling itself, according to reports citing DealReporter. That rumor was enough to push shares of the company up 5.4 percent and to illicit one of the best comments hidden in a noncomment in years: A Coach spokeswoman said, "We do not comment on speculation or rumors, particularly unsubstantiated ones." 

Gap Inc. caused some hearts to pause this week when trading in its stock was halted, pending news. Oftentimes that means a new owner, a new ceo or something similarly dramatic. When I heard Gap stock had been halted, I had a sinking feeling: Was that rumor that Fast Retailing was looking at the company real after all? 

No, it wasn't, or at least it probably wasn't. A vendor let Gap's February sales results slip early, and trading was stopped until the company could issue an official release. 

People like the big rumors, if only because it's an opportunity to pick apart prominent companies and wonder aloud, What would this company look like under the control of this billionaire or that billionaire? What could Bernard Arnault do with this brand? 

 Most of the chitter-chatter surrounding big brands is idle or hopeful speculation, but it sure is fun.
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