Financial blog Betaville reported that Coach has engaged investment advisory firm Evercore to work with the two companies on a potential tie-up.
According to a source cited by Betaville, senior executives from Coach and Burberry met a couple of times over the summer and held informal talks about a deal that would likely value Burberry at around £18.50 a share. Burberry's share price at pixel time was around £15.36.
Earlier this week the British luxury goods group revealed that the decline of the pound since the Brexit vote could help boost its profit for the year by as much as £125m. However, this wasn't enough to distract investors from a four per cent decline in revenue in the first six months of the year, and the designer led the FTSE fallers on Tuesday.
Burberry declined to comment.