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Goldman Sachs Stuck With Burberry Shares After Billionaire Sale

Goldman Sachs Group is stuck with falling Burberry Group shares that the firm purchased in a block trade.

Goldman Sachs Stuck With Burberry Shares After Billionaire Sale
Pedestrians pass a Burberry Group Plc luxury goods store in Munich, Germany. (Photographer: Krisztian Bocsi/Bloomberg)

(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.

To contact the reporter on this story: William Mathis in New York at wmathis2@bloomberg.net.

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Steven Crabill

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