Buyouts in the Italian luxury industry

“There’s going to be a proliferation and an acceleration of buyouts in the luxury industry,” Milton Pedraza, chief executive officer of the Luxury Institute LLC, a New York-based research and consulting firm, said in a phone interview. “They have high profit margins, but they need the capital to open stores all over the world and they need the expertise very often to globalize. The money is out there today and luxury is extremely attractive.”

It’s becoming increasingly difficult for Italian companies to secure financing amid the economic downturn, according to Francois Arpels, managing director of Bryan Garnier’s branded luxury goods practice in Paris. That’s making them more willing to explore deals with larger companies, he said in a phone interview.

After LVMH announced the $2.6 billion transaction, shares of Italian luxury retailers surged, with Ferragamo and Yoox SpA (YOOX) closing at records and Brunello Cucinelli SpA and Tod’s rising as much as 4.5 percent and 2.8 percent. Shoemakers Ferragamo and Tod’s are the most likely next targets, Equita Sim SpA said. Online retailer Yoox and Loro Piana-rival Cucinelli offer sales growth through 2015 of 88 percent and 45 percent, according to data compiled by Bloomberg.

Tod’s and LVMH are already connected. LVMH owns 3.5 percent of the shoemaker.

Gianni Versace SpA has said it expects to decide by October or November if it will sell a minority stake publicly or privately to fund growth.

Yoox, the 1.1-billion euro operator of e-commerce stores for brands such as Armani and Zegna, also could be a potential target, according to Chiara Rotelli of Mediobanca SpA. The retailer could be valued at 31.9 euros a share in a sale, the Milan-based analyst estimated in a July 10 report.

Cucinelli (BC), a maker of $1,820 cashmere sweaters, may lure buyers with its growth opportunities in China and thriving menswear line, Wu said. Cucinelli, with a market value of 1.4 billion euros, is projected to increase revenue to 406 million euros by 2015, according to analysts’ estimates compiled by Bloomberg.

http://www.bloomberg.com/news/2013-07-12/ferragamo-seen-as-target-after-loro-piana-deal-real-m-a.html