The M&A Scene in Italy
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MILAN — A generational shift, the impact of the COVID-19 pandemic and increased global competition have been accelerating a wave of mergers and acquisition deals in Italy — and the understanding is that more are in the pipeline.
In the second half of the year, it will be interesting to see the first stages of Etro’s evolution with L Catterton after the Italian fashion house in July agreed to sell a majority stake to the giant private equity fund, after months of rumors to that end.
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The goal is to grow Etro’s customer base, expand into new categories, enhance its digital presence and drive global expansion, with a focus on the opportunities offered by Asia. Founder Gerolamo Etro, known as Gimmo, will be appointed chairman of the company. Details about the other members of the Etro family involved in the company have not yet been disclosed. They include siblings Veronica, creative director for the women’s collections; Kean, men’s creative director; Ippolito, who oversees strategic management, and Jacopo, who is in charge of the home line. Francesco Freschi holds the role of general manager.
A highly anticipated initial public offering will be that of the Ermenegildo Zegna Group, which in July said it plans to list on the New York Stock Exchange by the end of the year through a deal with Investindustrial Acquisition Corp., a Special Purpose Acquisition Corporation, or SPAC. The deal is expected to give the fashion group a market capitalization of $2.5 billion and help it expand globally. Chief executive officer Gildo Zegna will retain his role and add that of chairman of the company.
The closing of the transaction is expected to occur in the fourth quarter of this year and the Zegna family will continue to control the company with a stake of about 62 percent. Investindustrial will have an 11 percent stake and 27 percent would be free-floating. Based on the transaction value, the merged entity will have an anticipated initial enterprise value of $3.2 billion. At the time of the announcement, Zegna dismissed any talk of succession. “The family is very united, nothing will change, we will stick to the way we were before and the deal was fully approved, also by the fourth generation unanimously,” he said at the time.
Speculation about the future of the Giorgio Armani fashion house has been circulating for years but has become louder and more persistent recently. One theory that does not seem to be going away any time soon is the possible tie-up between the Italian designer, who turned 87 on July 11, and the Agnelli family’s holding Exor, which owns Ferrari. Despite continued denials from both sides, Milan-based sources contend that the last word has not been said yet.
There is a link between Armani and the Agnelli family, as Andrea Camerana, a counselor and former licensing director at the fashion house, is the son of the designer’s sister Rosanna and Carlo Camerana, a cousin of the late Gianni and Umberto Agnelli. Also, in March, Armani signed a multiyear sponsorship of the Scuderia Ferrari racing team to supply formal attire and travel wear to the Ferrari team’s management, drivers and technicians to be worn at official events and during transfers linked to Formula One’s Grand Prix international races.
Armani in 2016 established a namesake foundation, at the time when independence was a priority for the designer. Observers believe that if the designer did eventually accept Exor’s offer, it would not be a problem to change the bylaws of the foundation.
Exor has been extremely active of late. In June it expanded its reach, investing in consumer goods by taking a stake in Ludovico Martelli SpA, a personal care products company known for its storied brands including Marvis, Sapone del Mugello, Valobra and Proraso. The holding has also invested in Hermès International’s China project Shang Xia, and has acquired a minority stake in Christian Louboutin.
Overall the acquisition wave in Italy has been evolving into nuanced partnerships and platforms meant to support a manufacturing pipeline that is increasingly relevant, yet more at risk in the wake of the pandemic, and signaling a teamwork approach that is steadily emerging in the Italian fashion industry. For example, Gildo Zegna paired with Prada chief Patrizio Bertelli on the acquisition of cashmere firm Filati Biagioli Modesto SpA, and he has been steadily growing the men’s wear giant’s supply chain, hinting at additional deals in the pipeline — while waving away the idea of a fashion conglomerate.
Bertelli and his wife Miuccia Prada have been passing on increasing responsibilities to their son Lorenzo, who has been group marketing director since 2019 and head of corporate social responsibility since 2020. Prada has been publicly listed on the Hong Kong Stock Exchange since 2011 and speculation about a possible delisting or a partnership with a major fashion group emerge from time to time, but no deal has materialized.
Patrizio Bertelli has long denied any intention to sell although LVMH Moët Hennessy Louis Vuitton, Kering and Compagnie Financière Richemont have been said to be potential interested parties.
Given how many Italian companies are owned by foreign investors or groups, Made in Italy supporters champion a potential launch of an Italian luxury conglomerate.
Renzo Rosso is one of the few Italian entrepreneurs who has openly spoken of building a fashion conglomerate through his OTB group. After acquiring Jil Sander from Onward Holdings Co. Ltd. in March, Rosso told WWD he is also eyeing the acquisition of specialized manufacturers, a strategy that allows a company to “become more solid and build know-how,” he explained, while protecting Italy’s unique supply chain. He is looking at different areas — handbags and footwear producers, as well as firms specialized in washes and treatments. Rosso was set on taking over the Roberto Cavalli brand, but in the summer of 2019 that company also passed into foreign hands, to Vision Investment Co. LLC, controlled by the founder and chairman of Dubai-based developer Damac Properties Group, Hussain Sajwani.
Conversely to Rosso, Moncler chairman and CEO Remo Ruffini denied any interest in forming a conglomerate when the company he leads took control of the Stone Island brand last year.
Footwear remains a hot category, as exemplified by Investindustrial’s sale of the Sergio Rossi brand to Fosun Fashion Group last month, and rumors about a possible sale of the Gianvito Rossi label as well as that of Aquazzura have been circulating among financial sources for quite some time. Florence-based retailer LuisaViaRoma, which has a strong online business, is also said to be an interesting business for investors.
Another group being watched by analysts is Tod’s SpA. In April, LVMH increased its stake in the Italian company to 10 percent. Analysts have long speculated on a possible sale of the group, which — in addition to the Tod’s SpA brand — includes Hogan, Fay and Roger Vivier, pointing to Bernard Arnault as a possible buyer. Tod’s chairman and CEO Diego Della Valle has repeatedly denied the company is for sale and has over time bought back shares with his brother Andrea.
Also to watch are the new luxury production pole Gruppo Florence, spearheaded by luxury veteran Francesco Trapani and established by VAM Investments, Fondo Italiano d’Investimento and Italmobiliare. Its goal is to develop a platform to supply high-quality Made in Italy products to major luxury fashion brands, while safeguarding the technical and cultural know-how of small and medium-sized family-owned Italian companies. Since its launch last October, Gruppo Florence has acquired five storied Italian manufacturers, the latest being Emmegi, a Lombardy-based firm founded in 1880 that produces men’s and women’s informal outerwear. And there are no signs the group is planning to stop now.
Also, the Made in Italy Fund, managed by Quadrivio and Pambianco, which invests in wine, food, beauty, fashion and furniture, is eyeing additional acquisitions, according to partner Mauro Grange. The fund has so far invested in 10 Italian companies, of which six are in fashion alone, from 120% Lino and Rosantica to Dondup and GCDS, and, most recently, a majority stake in footwear brands Ghoud and Autry.
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