MILAN — Ferragamo Finanziaria SpA, which controls SalvatoreFerragamo SpA, has increased the Ferragamo family’s ownership in theFlorence-based firm.
Minority shareholder Peter Woo, through hiscompany Majestic Honour Ltd., has sold a 2 percent stake in the luxuryhouse, cutting his holding to 6 percent. Woo has exercised a put optionon more than 3.3 million shares at the price of 9 euros, or $13 atcurrent exchange, corresponding to Ferragamo’s listing price, for atotal of 30.3 million euros, or $43.5 million.
The put optionwas originally stipulated at the end of February and revised inmid-April. In March, Ferragamo Finanziaria sold 8 percent of SalvatoreFerragamo Italia SpA to Hong Kong businessman Woo and his family.
Tostrengthen the group’s presence in a key area of the luxury business,the company said it was planning to increase its equity interest inFerragamo’s distribution companies based in Greater China, which willrise to a 75 percent stake from the current 50 percent (60 percent forMacau) in January 2013. The Woo family, who among other interests alsoowns the Lane Crawford Joyce Group, has been a partner of the group inGreater China for more than 20 years and helped distribute the brand inChina, Hong Kong, Taiwan and Macau. China has now grown into Ferragamo’slargest market.
Following the transaction, which was revealedin a filing to the Bourse this week, Ferragamo Finanziaria holds a 58.24percent stake in Ferragamo. Chairman Ferruccio Ferragamo explainedduring the road show that “[the Ferragamos are] selling a limited numberof shares because the family is very, very interested in the companyand wants to continue being involved.”
Also, in an InternalDealing communication, the Bourse stated that Ferragamo chief executiveofficer Michele Norsa purchased 10,000 shares on July 12, priced ataround 10 euros, or $14.30. for a total of 101,500euros, or $145,885at current exchange.
The fashion company made its debut on theMilan Stock Exchange on June 29, selling about 25 percent of its stockin a deal worth 379 million euros, or $545.2 million. Despite theinstability of global markets, the company’s shares have since performedstrongly, reaching a peak last week of 30 percent up from its initialpublic offering price of 9 euros, or $13. On Tuesday, two days shy ofits first month on the market, Ferragamo shares closed up 4.17 percentat 12.50 euros, or $18.
Last week, Deustche Bank analystsinitiated coverage with a “buy” rating and a target price of 12.50euros, or $18, expecting growth in Ferragamo’s profitability over thenext few months.
“Ferragamo offers one of the best companyprofiles with one of the lowest EBIT [earnings before interest andtaxes] margins in the soft luxury world. We believe all the ingredientsare in place and ready to be capitalized: the company needs to improveits store productivity by revitalizing the brand in Western markets,improving store attractiveness, and increasing efficiency ofmerchandising management,” stated the bank’s report. “The potentialoperating margin expansion of 5.4ppt, coupled with the buy-out ofminorities, makes Ferragamo one of the most interesting bottom-linegrowth stories in our universe, offering an EPS CAGR in 2010-13E of 35percent.”
In 2010,Ferragamo recorded sales of 782 million euros,or $1.03 billion at average exchange, and an EBIT margin of 11.1percent.
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