Prada, Zegna Again Team on M&A Deal
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MILAN — The Ermenegildo Zegna Group and Prada Group have joined forces once again, signaling yet another example of a cooperative attitude increasingly emerging among Italian fashion entrepreneurs, and the importance of high-quality knitwear in the luxury segment.
Zegna and Prada have agreed to buy a 15 percent stake each in Luigi Fedeli e Figlio Srl.
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Luigi Fedeli, currently chairman and chief executive officer of Fedeli, will hold the remaining 70 percent of the company and will continue in his present roles.
Founded in 1934 in Monza, Italy, and now overseen by a third generation of the Fedeli family, Fedeli is recognized for its Made in Italy knitwear and fine yarns.
Gildo Zegna, chairman and CEO of the Ermenegildo Zegna Group, and Patrizio Bertelli, Prada Group chairman and executive director, will join Fedeli’s board of directors.
“This agreement for a Prada Group’s acquisition of a shareholding in Fedeli represents a strategic investment to preserve the know-how and tradition of an Italian excellence in fine yarn,” Bertelli said.
“Over the years, the acquisition of historic Italian companies has enabled the group to build a platform of luxury textile companies guaranteeing the highest quality and safeguarding the uniqueness of Italian craftsmanship,” said Gildo Zegna. “Fedeli’s own focus on quality and sustainability has brought us closer. In addition to including another excellent craftsman in our textile supply chain, this acquisition makes me particularly proud as it underlines our commitment to contributing to the growth of Fedeli and to preserving and enhancing the craftsmanship of Made in Italy.”
In 2021, in what was surely considered a major new partnership and a sign of an increased effort to protect the country’s unique supply chain, the two companies first joined forces to acquire a majority stake in Filati Biagioli Modesto SpA, which specializes in the production of cashmere and other precious yarns.
“Once again, after the acquisition of Filati Biagioli, together with Zegna Group we are committed to a cooperative and teamwork approach in the fashion and Made in Italy industry,” continued Bertelli. “This operation reflects the philosophy that our group has always pursued: direct control of the supply chain at every single stage of the production process, which also allows us to speed up on traceability of raw materials and on the transparency of our supply chain.”
Zegna enthused that “for the second time in two years, I am supported in this journey by a great entrepreneur from the Italian fashion industry with whom I share a passion for the ‘filiera’ and the ambition to create a system teeming up with Italian groups.”
Luigi Fedeli stated that he “strongly believes in Italy and agreements that unite Italian players. Moreover, the potential synergies identified by the Prada and Ermenegildo Zegna Groups perfectly align with Fedeli’s continuous pursuit of quality, craftsmanship and innovation. I am delighted to join forces with two leading groups in the industry and to continue developing all-Italian excellence.”
The transaction is subject to clearance from the European Commission under the EC Merger Regulation.
The mergers and acquisitions scene in Italy has been picking up speed, but it is also 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 COVID-19 pandemic.
In the deal announced on Tuesday evening, the protection is aimed not at a supplier but at a single family-owned company and brand.
“We want to flank the company and help it grow,” said Zegna, noting the sale was not related to any financial difficulties at Fedeli. “On the contrary, it’s a solid company with excellent results, and showing exceptional growth.”
Luigi Fedeli said the company has doubled sales in two years, reaching 22 million euros in 2022.
“I’ve known Gildo for years, we are on the same wavelength in terms of product and mentality. There is chemistry [with the partners], this is not only about numbers,” explained Fedeli.
“Yes, chemistry is important, we first started talking [about a potential deal] before COVID-19, which slowed us down,” Zegna said. “The brand is very well-known and appreciated for its knits and jersey. I am a consumer myself, and my father always put in his made to measure orders.”
Zegna expressed strong confidence in Fedeli. “We can map out a strategy but it’s premature to discuss it now, we just signed the deal today. However, I can tell you that it’s stronger in menswear, while womenswear is still in its infancy, there is a lot to do, and Asia is still small,” he offered, pointing to segments and markets with strong growth potential.
The U.S. has grown to become the brand’s first market, and Fedeli attributed this also to a local presence, built by his son Niccolò, who has opened two showrooms stateside.
“Our taste is very much in line with that of American customers, we share the same idea of high-quality product,” Fedeli said.
Through its eponymous brand, Fedeli is distributed in 13 monobrand boutiques in cities such as Milan and Cannes, France, and eight franchised doors in South Korea, and more than 400 multibrand stores worldwide, from Mitchells to Neiman Marcus and Stanley Korshak, among others.
“This is a significant development and we want to make sure that that brand will remain Italian forever, it has a historical value,” Zegna said.
In the Biagioli Modesto deal, Prada and Zegna each acquired a 40 percent stake in the company, which is based in Montale, outside Pistoia, Italy. The founding Biagioli family retained a 15 percent stake and the remaining 5 percent is owned by Renato Cotto, who took on the role of CEO.
At the time, Gildo Zegna and Bertelli explained the reasons behind the deal, sharing the goal to ensure continuity to the excellence of the company they acquired and to preserve its know-how. As entrepreneurs and industrialists, they also share a belief in developing their own Made in Italy production chain ensuring uncompromising quality at every stage of the production process.
Other M&A examples in Italy include Moncler’s acquisition of Stone Island or Renzo Rosso’s OTB acquisition of Jil Sander.
In May, in the first such deal for Chanel and Brunello Cucinelli, the two companies partnered on an acquisition of a 24.5 percent stake each in Italian cashmere manufacturer Cariaggi Lanificio SpA. This is a new development in a deal that was signed last year by Cariaggi and Cucinelli, the latter’s first such M&A. At that time, Cucinelli revealed he was buying a 43 percent stake in Cariaggi, his longtime cashmere supplier. While Chanel over the years has been buying stakes in 40 suppliers, of which 15 are based in Italy, this is the first time it is partnering with another established fashion brand.
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