BERLIN — Private equity group Apax Partners is not pursuing plans to take a stake in Escada, the German fashion house said Wednesday.
Escada confirmed it had been in talks over the last few months with the London-based company concerning an Apax investment in the fashion firm. In late March, speculation that Apax was preparing to buy into the company, accompanied by rumors that ex-Hugo Boss chief executive officer Bruno Sälzer would be brought in as new management, sent Escada’s faltering share price surging over 30 percent.
Escada said Apax informed the company’s board early this month that negotiations would be discontinued. The board was told “the recent evolution of the stock price and the weakness of the international financial market do not give a basis for pursuing the project.”
Late Wednesday, Escada revised downward its sales and earnings forecast for the year ending Oct. 31. Based on performance through March and weakened market conditions, the group is now expecting consolidated sales to decrease by “a high single-digit percentage point” and is projecting a decline in group EBITDA of about 25 percent compared to last year. However, the management board said the result after taxes could be “slightly positive.”
Escada had planned lower single-digit growth in both consolidated sales and group EBITDA based on a stable market environment. The new forecast was also prompted by worsening economic indicators in key markets, Escada said, especially “the heightened recessionary indicators in the U.S.A.”
Rumors are still rife concerning the future of Escada ceo Jean-Marc Loubier, who assumed the top post less than a year ago. Market sources here had expected a new ownership and possibly a new management structure to be in place by the Escada annual meeting in Munich on April 17.
Some sources suggest the Apax deal fell through because the equity firm was pushing for a new management team led by Sälzer, while current majority shareholder and prospective Apax cohort Rustam Aksenenko remained behind Loubier. It was Aksenenko who effectively placed Loubier in the leadership position in June.
However, other insiders suggest Apax and Aksenenko are deliberately trying to push Escada’s share prices down before actively reentering the fray.
This story first appeared in the April 10, 2008 issue of WWD. Subscribe Today.
Escada’s share price reacted sharply to Wednesday’s announcement, falling 10.8 percent to 14.35 euros, or $22.67 at current exchange.