By Agnieszka Flak
MILAN (Reuters) – The founding family and largest shareholder in Italy’s Tod’s said it would spend up to 338 million euros ($344 million) to buy out other investors in the luxury goods brand and take it private, aiming to spur its revival.
The Della Valle brothers said in a statement their holding company would pay 40 euros for each Tod’s share, a 20.4% premium to the stock’s closing price on Tuesday, valuing the company at 1.32 billion euros.
The offer is equal to the price the company set at the time of its initial public offering back in 2000.
Like other Italian brands that have built their fortunes on craftsmanship, Tod’s has struggled to appeal to younger luxury shoppers in recent years.
Famous for its Gommino loafers, Tod’s launched a strategy in late 2017 to revamp its brands, but the coronavirus pandemic hampered its efforts.
Group sales bounced back by almost 40% last year, increasing after five years of consecutive declines.
“The objective is to enhance the value of the group’s individual brands, giving them strong individual visibility and operational autonomy,” they said in the statement.
Tod’s has grown from a shoemaking workshop set up at the turn of the last century by the grandfather of the Della Valle brothers. Its brands also include Roger Vivier, Hogan and Fay.
“Through this strategy, we intend to strengthen the positioning of the brands at the top of the quality and luxury market, with a high level of desirability,” the statement added, saying that not being listed would allow the company to focus on growth without being judged on short-term results.
LVMH ROLE
The Della Valle brothers, who directly and indirectly hold a 64.45% stake in Tod’s, will launch the bid for a further 25.55% of the company’s shares through their joint holding company DeVa Finance S.r.l.
The remaining 10% is held by Delphine SAS, part of the LVMH Group.
Delphine has struck an accord with the brothers, under which it will not tender its stake and will remain a shareholder in the delisted group with the same holding.
Shares in the company were trading up 21.6% by 0723 GMT at 40.6 euros, slightly above the offer price.
From highs of 145 euros reached back in 2013, shares in the luxury group have underperformed peers in recent years.
Up to Tuesday’s closing price, the stock was down 32% in the year-to-date, compared with French luxury conglomerate LVMH and Salvatore Ferragamo, another struggling Italian luxury brand, down 7% and 25%, respectively.
BNP Paribas, Crédit Agricole Corporate Investment Bank and Deutsche Bank are acting as financial advisers and are also providing financing for the bid, while BonelliErede is a legal consultant.
($1 = 0.9825 euros)
(Reporting by Agnieszka Flak; graphic by Stefano Bernabei, editing by Jason Neely and Keith Weir)
