Burberry keeps rebels in check

RETAIL group GUS is to press ahead with the flotation of fashion house Burberry, despite fierce opposition from some shareholders. GUS, which declares its full-year results on Wednesday, aims to raise up to £375m from floating 25% of Burberry on the London stock market.

The listing would value Burberry, which has been made fashionable in recent years by celebrities such as supermodels Kate Moss and Elle Macpherson, at up to £1.5bn.

According to sources, Burberry is on track to list towards the end of June. GUS is expected to confirm the float on Wednesday. But investors have called for GUS to demerge Burberry. Under a full demerger, existing GUS investors would receive a share in Burberry and one in the remaining GUS group for each share they currently hold.

A source close to the float told Financial Mail: 'Some shareholders made the management look at the possibility of a demerger. They are worried about Burberry not selling at a high enough price in a difficult market for new share issues.'

But GUS's management, led by group chief John Peace and Burberry chairman Victor Barnett, are believed to have convinced rebel shareholders to accept a stock market listing. Peace and Barnett believe they can get the right price for Burberry stock in a flotation.

GUS has hired American investment bank Merrill Lynch to manage the Burberry flotation. Merrill ran the flotation of pubs group Punch last week - which got away successfully at the second attempt.

Punch priced its shares at 230p, raising £160m. It was hoping for £250m. But sources say Punch marked a turning point and convinced GUS to pursue its flotation. One banking source told Financial Mail: 'The market is wide open as long as the price is right.'