WWD.com/business-news/financial/brioni-courts-potential-investors-2050487/
government-trade
government-trade

Brioni Courts Potential Investors

Brioni is finally in the shop window.

MILAN — Italy’s Brioni is finally in the shop window.

This story first appeared in the March 6, 2009 issue of WWD.  Subscribe Today.

After the luxury apparel label tapped BNP Paribas in November to help sell a 20 to 25 percent stake, a dossier is expected to go out to a short list of potential investors next week, sources said Thursday. According to market speculation, these may include Mediobanca, PPR and LVMH Moët Hennessy Louis Vuitton.

Brioni, PPR and LVMH declined to comment, while Mediobanca did not return calls.

Brioni’s controlling shareholders, who are descendants of the company’s founders, are looking for a 100 million euro investment, or $125.4 million at current exchange, to ease debts and develop the business — including buying an accessories plant — with a view to listing on the Bourse in four or five years, sources said. Brioni bought out former chief executive officer Umberto Angeloni for an estimated 80 million euros in 2006.

“In effect, the family wants to recoup that sum,” sources said.

Brioni has yet to release figures for 2008, although sources estimated earnings before interest and taxes hit 40 million euros, or $58.9 million at average exchange, on revenues of 200 million euros, or $294.3 million, valuing the company at 400 million euros, or $588.5 million. In 2007, Brioni’s EBIT gained 26 percent to 31.4 million euros, or $48.6 million, on sales of 206.5 million euros, or $319.74 million.

Brioni is expected to attract wide interest from cash-rich operators as the company has a strong brand, a profitable and growing business, and men’s wear, which accounts for around 90 percent of turnover, is viewed as an attractive category for emerging markets.

“Everyone is going to look at it,” sources said. “Although [Brioni’s owners] may have to give up a bigger stake than planned.”

With current earnings multiples deflated due to worsening market conditions, a valuation closer to 300 million euros, or $376.3 million, is more likely, sources said. Moreover, a strategic or industrial investor would want a majority stake, particularly given Brioni’s complicated family ownership, they said.

“The value is declining and equity keeps going up,” sources said.

Brioni has three co-ceo’s: Andrea Perrone, who is the grandson of co-founder Gaetano Savini; Antonella De Simone, who is the granddaughter of co-founder Nazareno Fonticoli, and Antonio Bianchini. Perrone runs the company, while De Simone oversees marketing and communications.

— With contributions from Andrew Roberts

and Miles Socha, Paris