The Italian luxury goods company strongly denied reports Tuesday it is in talks to sell a third of its shares to Compagnie Financière Richemont SA. A Prada spokesman said the company “categorically denies any negotiation whatsoever to sell any share to Richemont.” A spokesman for Richemont, which controls a stable of brands including Van Cleef & Arpels, Cartier, Chloé and Dunhill, said the Geneva-based group never comments on rumors. A well-placed source, however, dismissed the story as “just silly. I don’t know where they got it, and clearly it’s a quiet time for news.”
A Milan-based source said Prada might want to sell a minority stake to fuel expansion, but indicated as significant the fact that Johann Rupert, Richemont’s executive chairman, has been taking a more hands-on approach as interim chief executive officer since April, replacing Norbert Platt. “I hear Rupert is not particularly interested in fashion as he believes it is a sector especially at risk now,” said the source, adding Rupert also is unlikely to settle for anything but a majority stake. “Also, he is extremely strong-willed, I can only imagine the sparks with the notoriously temperamental [Prada chief Patrizio] Bertelli.”
Another source claimed these kinds of reports “surface only when it’s a slow news day — at the end of July or at the beginning of January,” referring to an Aug. 1 Italian daily La Repubblica article that claimed Prada’s lenders had contacted Richemont about taking a 30 percent stake — a report Prada also firmly denied at the time. “It’s news to Prada,” the company spokesman said last summer. In August, the company once again denied another Italian press report stating the emirate of Qatar was interested in taking a 30 percent stake.
The August La Repubblica story said Prada’s lenders contacted Richemont to see if there was an interest in acquiring as much as 30 percent of Prada, but that the “proposal was received quite coldly” because it valued Prada at 2.7 billion euros, including the debt, which was nine times Prada’s gross operating margin of 280 million euros and 21 times the net profit — too high for Richemont. Also, the story said Richemont didn’t have much experience in fashion, although it fares well with its jewelry and watch divisions, and that it is not that interesting for an industrial group to hold a minority stake in Prada without specific agreements nailed down to reach a majority stake. In addition, the paper said, given the economy, Richemont wants to keep as much cash as possible in its coffers.
Prada last summer received some breathing room as itslenders — banks Intesa Sanpaolo, Unicredit, Calyon, Banca Leonardo, Banco Popolare and Centrobanca — agreed to postpone until 2012 the term payment of 450 million euros, or $641.8 million, of the group’s debt. As a result, Bertelli and his wife, Miuccia Prada, are not immediately pressured to sell a stake in their company.
Amsterdam-based Prada Holding, through which Bertelli and the designercontrol 95 percent of Prada SpA, has debts totaling 650 million euros, or $927.1 million. Intesa Sanpaolo controls the remaining 5 percent of the company. Separately, Prada SpA, which operates the Prada, Miu Miu, Car Shoe and Church’s brands, closed fiscal 2008 with net debts of 537.4 million euros, or $784.6 million. Dollar figures were converted at average exchange rates for the periods to which they refer.
The debt piled up during the company’s spending spree in the Nineties when it expanded through the acquisition of brands such as Jil Sander, Helmut Lang and a stake in Fendi.
Although Prada has called off plans for an initial public offering four times this decade citing market conditions, the company has not ruled out a listing on the Milan Stock Exchange at some point and is building its management team to this end. In June, the company promoted Sebastian Suhl to group chief operating officer, succeeding Brian Blake, who quit in April for personal reasons after 18 months in the role.
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