MILAN — Global M&A activity picked up in the first nine months of the year, despite a lackluster economy, according to the annual Pambianco study on deals in the fashion and luxury sector.
In the first nine months of 2013, there were 81 deals, up 8 percent compared with 75 in the same period the year before. Since 2011, M&A deals have grown almost 40 percent.
The Milan-based consultancy said the market is dominated by private equity funds, holdings and private investors, which all together account for 60 percent of M&A activity.
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The number of industrial firms that buy other industrial firms in fashion and luxury is decreasing, while there are increasingly more financial players, such as equity funds, and holdings or groups such as LVMH Moët Hennessy Louis Vuitton and Kering, expanding their stables of brands. Private buyers are either entrepreneurs that buy back their own companies, such as Alberto Aspesi and the Mancini family reacquiring the Aspesi and Cisalfa brands, respectively, or “tycoons” with substantial financial means to invest in the sector, such as the Guerrand-Hermès family buying a 45 percent stake in French jeweler Arthus-Bertrand, or billionaire industrialist Len Blavatnik buying into Russian online retailer Lamoda.
Geographically, in the first nine months of 2013, 44 deals were inked outside Italy, or 54 percent, and 21 were made among Italians, accounting for 26 percent of the total. Foreigners investing in Italian brands completed 13 purchases, accounting for 16 percent of the total, and only three deals saw Italians buying outside the country: Cavit bought German sparkling wine brand Kessler; La Rinascente bought Copenhagen-based department store Illum, and Tamburi Investment took a 20 percent stake in French furniture chain Roche Bobois.
Pambianco noted that foreign investors continue to look at Italy and its “coveted preys” in the fashion and luxury sector, citing Pomellato being bought by Kering; Loro Piana and Milan’s storied café Cova taken over by LVMH, and Valextra, now controlled by the London-based investment firm Neo Capital.
Also significant is the activity of private equity funds that invest in medium-size companies with the goal to develop them in the medium term, such as Clessidra taking control of jewelry brand Buccellati, and DGPA acquiring a 75 percent stake in fashion label Golden Goose.
Among the fund-fueled M&A deals outside Italy, Pambianco cited Apax buying American retailer Rue 21; TowerBrook Capital buying True Religion; General Atlantic investing in Tory Burch, and Leonard Green buying a minority stake in Topshop.
The consultancy concluded by highlighting a new trend that has developed in the past few months: big luxury groups taking stakes in young emerging designers, such as LVMH investing in Nicholas Kirkwood and J.W. Anderson, and Kering taking stakes in Altuzarra and Christopher Kane.