With reports that M&A activity in Europe, in the fashion and luxury space over the last six months has approached $10 billion, analysts expect 2011 to be a pivotal year for investments.
Following the recent aquisition of Bulgari by LVMH, Tiffany & Co
, Burberry and Hugo Boss have all been tossed around the industry by industry experts as potential businesses ripe for acquisition. WWD recently reported that Richemont ‘is said to be sitting on at least $2 billion in cash’ and that the Swatch Group’s decision to cut dividends in 2009 was to ‘preserve cash to give it flexibility to acquire firms’.
Whether or not the M&A momentum will continue at the speed of knots it has so far experienced is unknown, however it is likely to retain the attention of the luxury media as Jimmy Choo goes under the hammer, Hermès scrambles to protect itself from LVMH and L Capital expands in India and China. Luxury Society presents our monthly wrap up of investments within the industry.
Sold: Bulgari, LVMH
LVMH purchased the Bulgari family’s controlling stake
in the brand for 4.3 billion euros, and will set up an eventual takeover of the entire jeweler. The Bulgari family swapped each of its shares for LVMH stock, making them the second-biggest family shareholder in LVMH. LVMH then paid out minority shareholders in Bulgari in cash.
Stake: Oscar de La Renta, GF Capital Management & Advisors
Oscar de la Renta sold an estimated 20 percent stake to GF Capital Management & Advisors for an undisclosed amount, to bring beauty and fragrance back in-house, open more stores and introduce new categories. “We believe that now is the time to bring new products to the market in a responsible way and to broaden our presence in geographical areas where we are underrepresented," remarked CEO Alex Bolen.
Negotiation: Rémy Cointreau Group, EPI
EPI, a family-owned group controlling JM Weston, Bonpoint, Alain Figaret, François Pinet, Michel Perry and Château La Verrerie, is reportedly in exclusive negotiations with the Rémy Cointreau Group. Discussions are rumoured to focus on the possibly selling Rémy’s Champagne division, including the Piper-Heidsieck and Charles Heidsieck brands.
Launch: L Capital, China and India
Extending the reach of L Capital, the private equity fund created in 2001, sponsored by the LVMH Group and Groupe Arnault, is the launch of L Capital in India and China. Its fourth private equity fund is reportedly worth $640 million, for investments in sectors like consumer brands, lifestyle retail, media and entertainment.
Speculation: Prada, IPO
Reuters has reported that Prada is set to file its listing application with Hong Kong regulators by the beginning of April. Their sources revealed that the Italian luxury goods company originally planned to list in Hong Kong at the end of June, however at the time of press Prada had not made any informations public.
Sold: Gianfranco Ferre, Paris Group
Paris Group recently bought distressed Italian fashion house Gianfranco Ferre for an undisclosed amount, and intends invest an initial 25 million euros relieving the company of debt and opening 50 stores worldwide. The Dubai based group operates 25 restaurants and 250 directly-owned stores and licences for brands including Versace, Cerruti and Boss across the Middle East and Russia.
Stake: Charles & Keith, L Capital Asia
L Capital Asia purchased a 20 percent stake in Charles & Keith, a Singaporean shoes and accessories brand founded by Charles & Keith Wong, for more than $30 million. L Capital Asia is said to have fought off a slew of rival suitors that included other private equity funds, high net worth investors and even a manufacturing firm.
Negotiation: Gitanjali, L Capital
L Capital is rumoured to be in exclusive talks to acquire a significant minority stake in Gitanjali Gems’ proposed subsidiary, that will control its branded jewellery and retail businesses. The deal, reported to be $100-125 million. The Gitanjali Group was founded as a cutter and polisher of diamonds for the jewellery trade, but now integrates rough diamond sourcing, cutting, polishing, distribution, jewellery manufacture, jewellery branding and retail in India and abroad.
Sold: Hautelook, Nordstrom
Nordstrom, the department store chain, acquired HauteLook, a flash sale online retailer for designer goods, for $180 million in stock. The transaction marks the first time a traditional retailer has acquired a company specialising in online private sales in the US.
Speculation: Ferrari, IPO
Fiat boss Sergio Marchionne is reportedly considerating a floatation of the Ferrari brand, of which Fiat currently owns 85%. This is said to be a part of a bigger plan to merge Fiat with Chrysler, generating enough cash revenue to raise Fiat’s current stake in Chrysler from 20% to 51%. However will not be possible until Chrysler repay the US and Canadian governments $7 billion in loans acquired during 2009.
For Sale: Jimmy Choo
Sales rumours date back to August 2009, when it was reported that owners of Jimmy Choo were considering selling the label for a price tag of up to £500 million after reportedly seeking “strategic options” from investment banks. However the brand was not officially put on the market until recently, reportedly gaining interest from LVMH and more than 10 other potential bidders. Most recently it has been announced that Jimmy Choo intended to buy back the label he founded in 1996, which has been made more plausible by a backing from the Malaysian government.
Stake: Salvatore Ferragamo, Peter Woo
Rumoured to be considering a possible floatation, Italian fashion house Salvatore Ferragamo sold 8 percent of its capital to Hong Kong partner Peter Woo and his family, and raised its holding in Chinese distribution firms but did not disclose details.
Sold: Villa Daslu, Laep Investments
Villa Daslu, one of Brazil’s top luxury fashion emporiums, has been bought by Brazilian private equity fund, Laep Investments, for approximately $39 million. Laep said its offer to purchase the Daslu brand and its assets includes $12.6 million in cash to capitalise the business and erases $26.4 million in debts that Daslu had with Laep and other creditors.
Speculation: Genesis, L Capital
The recently launched India and China arm of L Capital is said to be in negotiations to buy a stake in domestic fashion and lifestyle goods retailer Genesis Colors. Genesis currently holds distribution rights to luxury brands such as Just Cavalli, Canali, Kenzo, Paul Smith and Jimmy Choo, with over 125 outlets across India. This would be the first investment by LCapital into an Indian entity.