MILAN — The Benetton family is about to spend more than $360 million to get a little more privacy for their namesake fashion brand.
The family confirmed Wednesday that its Edizione Srl holding company will launch a tender offer and delist Italian clothing and textile manufacturer Benetton Group. Edizione controls 67.08 percent of Benetton, and will offer 4.60 euros, or $6.04 at current exchange, a share for the remaining 32.92 percent of the company for a total sum of over 276.6 million euros, or $363.7 million.
The price is at a 15.6 percent premium compared with the share price of 3.98 euros, or $5.23, before trading in Benetton shares was suspended on the Milan Stock Exchange on Tuesday.
In a separate development, Consob, Italy’s equivalent of the Securities and Exchange Commission, is investigating the unusual rise in Benetton share trading over the past two days and possible insider trading. No further details could be learned.
Edizione attributed the decision to take Benetton private to a rapidly evolving backdrop. Taking into account the market’s volatility, it said a “delisting could supply management with the flexibility required in the medium and long term to implement the necessary actions to face the challenges derived by a changed competitive context.”
Benetton, which went public in 1986, is a small part of Edizione’s overall holdings that span from highway catering and communications to real estate and agriculture.
A Milan-based source said Benetton’s executive deputy chairman Alessandro Benetton, son of co-founder Luciano Benetton, is expected to effectively take the helm of the Italian group in May. The source said a delisting would allow him to freely consider alternatives for the brand, including perhaps a spin-off, as part of a wider restructuring of the family’s businesses.
Other sources believe Benetton will focus on further expanding and developing the brand, which will be easier as a private company.
The Benetton brand was launched in 1965 by Luciano Benetton and his siblings Giuliana, Gilberto and Carlo. Spearheaded by Luciano, the label grew from its core business of sweaters into a fashion phenomenon, investing in retailing and expanding around the world, in regions including Iran and Cuba, and even in war zones, such as Sarajevo. The Benetton name over the years was associated with provocative and often graphic advertising campaigns created by photographer Oliviero Toscani. In November, the company stirred controversy again with its Unhate campaign, portraying montage images of world leaders, including the Pope and President Barack Obama, in close-up kisses.
But as competition from fast-fashion companies like Zara and H&M increased, Benetton’s critics accused the company of lagging behind. Its brightly colored fashions began to look tired against the more runway-influenced designs of its competitors. Slow consumer spending, especially in Europe, and rising costs of raw materials also affected the bottom line of the company, which warned on Tuesday that its 2011 profits would be more than 30 percent below the 2010 level, at an estimated 70 million euros, or $91.8 million.
In June, Alessandro Benetton tapped a new creative director, former Levi’s vice president of global merchandising and design You Nguyen, to help turn a new leaf and revamp the brand.
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