Goldman Sachs Stuck With Burberry Shares After Billionaire Sale
(Bloomberg) -- Goldman Sachs Group Inc. is stuck with falling Burberry Group Plc shares that the firm purchased in a block trade, according to a person briefed on the transaction.
Billionaire Albert Frere’s Groupe Bruxelles Lambert SA selected Goldman Sachs’s international unit to sell its 6.6 percent stake in Burberry for about 498 million pounds ($673 million). While the investment bank bought the shares at a discount of more than 4 percent to Tuesday’s closing price, the stock fell on the news and dropped as much as 7.8 percent in London. That left the firm holding shares at a paper loss, said the person, who asked not to be identified because the bank’s position isn’t public.
In a block trade, banks offer sellers a chance to unload a large stake all at once. The banks typically make money by bidding on shares at a discount to the current price and selling them for slightly more. The discount helps protect the firm from a price drop and pays for the risk it takes while locating new buyers, which usually happens overnight or within days of the deal.
Financial News reported Goldman’s position earlier Wednesday.
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