By  on April 23, 2008

MILAN — Labelux Group, a Vienna-based luxury goods holding company, has reached an agreement to acquire Bally International from private investment fund TPG Capital for an undisclosed sum. The transaction will be finalized this summer.

Labelux is owned by Joh. A. Benckiser SE, a family-controlled financial holding company, and has subsidiaries in the Austrian capital and in Milan. The Benckiser family also owns the beauty firm Coty.

To build its portfolio, Labelux has focused on brands within the jewelry, accessories, leather goods and fashion sectors, and is already negotiating its next deal.

Founded last year, Labelux may be a newcomer on the luxury goods scene, but its management has a clear vision on what it's after.

"What differentiates us from the others is that we start from the brand to make sure there's something to revitalize on a long-term basis. In the case of a young designer who is in its early stages, our relationship is linked on trust and instinct, but with a company like Bally, we looked at its heritage and strong roots to bring it to the next level," said Berndt Hauptkorn, chief executive officer of Labelux.

Earlier this month, the group acquired a majority stake in London-based jeweler Solange Azagury-Partridge.

Hauptkorn claimed that, while Bally may not be as talked-about as Gucci, it has huge potential. "Private equity funds buy and sell, generating efficiency and cash flow. I think TPG did a good job in moving Bally forward, but we have a long-term perspective for which we want to implement the design team, product quality, advertising and suppliers," said Hauptkorn.

TPG acquired Bally in 1999 for an estimated $200 million at a time when it was registering significant losses. The brand has gone through several reincarnations and creative directors, with repeated rumors that TPG was looking to sell it.

Bally finally broke even in 2004. Six years ago, Marco Franchini was appointed ceo and his tenure has led to significant restructuring in terms of brand identity and image involving all aspects of the business, including production, distribution and a new store concept.

Last year Brian Atwood was tapped as creative director to further raise brand awareness and streamline design operations."TPG has always been on our side and supported Bally in its growth path, but Labelux is the best partner to further develop and build Bally right now because they are committed, reason with a long-term vision and have a European sensibility," said Franchini.

Bally's 2007 sales stood at 400 million Swiss francs, or $364 million at current exchange. Franchini's aim is to end this year with sales of 500 million Swiss francs, or $455 million, attributing the increase to the fact that last year Bally took full control of 53 stores in China and Hong Kong that were previously franchised to partners.

Bally was founded in 1851 by Swiss industrialist Carl Franz Bally as a footwear company, and over the years has evolved into a full-range brand with 250 freestanding stores and 750 points of sale worldwide. Footwear is the core business, representing 50 percent of sales.

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