MILAN -- After a bitter tug-of-war that lasted more than two years, Gianfranco Ferre and his former business partner, Franco Mattioli, agreed on Thursday to sell the fashion house they founded more than 20 years ago to Gruppo Tonino Perna, the parent...
MILAN -- After a bitter tug-of-war that lasted more than two years, Gianfranco Ferre and his former business partner, Franco Mattioli, agreed on Thursday to sell the fashion house they founded more than 20 years ago to Gruppo Tonino Perna, the parent of Italian fashion group IT Holding, for an undisclosed sum.
The agreement, further evidence of the rapid consolidation in the luxury sector, caps more than 30 months of wrangling between Ferre and Mattioli -- who could never agree on a buyer, and who stopped speaking to one another after Mattioli announced in June 1998 that he planned to retire and sell his 49 percent stake in the company.
The sale, managed by Chase Manhattan and the corporate finance boutique bank Aforge Finance, will be completed next month. Industry sources say GTP paid between $150 million and $175 million for its 90 percent stake in Gianfranco Ferre SpA.
"I am very happy to have concluded this deal with GTP," Ferre told WWD during an interview at his sprawling headquarters here. Ferre said he worked on the sale every night after dinner -- and on Sundays -- together with his management team. "I have always respected GTP for their consistent appreciation and support of my work. I chose them because they can offer me so much -- distribution, management, new projects."
Mattioli could not be reached for comment.
It also appears that GTP, which had been in talks with Ferre and Mattioli for about a year, made the designer one offer he couldn't refuse: a couture collection. As part of the deal, GTP will set up a couture atelier here with the first collection to be unveiled in Paris in 2002.
"I view the new collection as an adventure -- a very interesting proposal," said Ferre. "I already design made-to-measure clothing for clients such as Sharon Stone, Elizabeth Taylor, Oprah Winfrey and the Queen of Jordan, so this would be a continuation of that work."
Ferre launched his first couture collection in the late Eighties, before he left for Paris in 1989 to work as chief designer for Christian Dior.
Under the terms of the deal -- signed Thursday morning at a leather-covered conference table at Ferre's headquarters -- GTP will purchase a further 69 percent stake in Gianfranco Ferre SpA. Last December, GTP purchased a 21 percent stake from Mattioli and called it a "financial investment." Ferre, who will hold the remaining 10 percent of the house, will remain creative director of the company and chairman of the board."This agreement respects my creative independence and my control -- and power of veto -- over the creative team," Ferre stressed during the interview.
Asked why he chose to sell to an Italian fashion group, Ferre said: "The tradition of quality, style and craftsmanship in Italy is superior, which is why I want to remain here. Also, the Italian fashion system is complete: The Italians can produce, distribute and merchandise very well."
When the deal is complete, GTP will transfer Ferre's company to IT Holding, the publicly quoted fashion group that owns Romeo Gigli, Malo, Exte, Gentry Portofino and Husky, and manufactures jeans and young lines under license for Dolce & Gabbana, Gianni Versace, Roberto Cavalli -- and Ferre.
Giancarlo Di Risio, the managing director of IT Holding, who had been pushing for the Ferre purchase, said Thursday's agreement was a historic one.
"We are talking about a designer who wrote the history of Italian rtw, along with Giorgio Armani and Gianni Versace. He is a part of Italian history," said Di Risio in a telephone interview.
"He is without a doubt the most prestigious name in our stable and, we believe, the one Italian designer who approaches luxury like the French. He is the only Italian designer to have worked at a French couture house," Di Risio added.
While Di Risio said that GTP and Ferre still had to hammer out a business plan, he stressed that the company's overall strategy would be to relaunch the Ferre brand.
"Together, we'll redraw the map of Ferre with the idea of preserving the most prestigious, most luxury-oriented parts of the business," Di Risio said.
Ferre said that in addition to the planned couture collection, there were talks about launching a fine jewelry line and a home fabrics and furnishings collection. He said, too, that new store openings would also be a part of the deal, but that nothing had been nailed down yet. Ferre currently has 218 sales points worldwide for his men's and women's lines.
Robert Bensoussan, chief executive of Gianfranco Ferre SpA, said the company's major licenses would continue "as usual," and would be examined on a case-by-case basis when they expire, between 2002 and 2004."This is about continuity, not fracturing relationships," said Bensoussan. "When the time comes, we'll sit down and review the licenses and decide then whether or not we want to continue."
While Ferre produces his signature line in-house, he has licenses with Marzotto for his Studio and GFF lines. IT Holding produces the Gianfranco Ferre Jeans and Sport lines, which equities analysts currently value at $36 million to $40 million. Bensoussan said the signature line would continue to be produced in-house.
Bensoussan also said he was expecting the fashion house to near a break-even point this year. As reported, Bensoussan has been helping Ferre tighten operations and make the company more efficient. Cleaning house, Bensoussan said, forced Ferre to report $9.5 million in losses last year. This year, the company expects to report under $2.5 million in losses.
"By 2001, the company will be showing a profit," he said.
This year, worldwide sales of all products bearing the Gianfranco Ferre name are expected to reach $227.5 million while the company's direct revenue, including royalties, will be $60 million. Neither Bensoussan or Di Risio would give sales projections for the coming years.
The sale of Gianfranco Ferre SpA comes during a spate of luxury acquisitions; this month alone, Gucci purchased controlling stakes in Alexander McQueen and Bedat & Co., and LVMH Moet Hennessy Louis Vuitton bought Donna Karan.
But the Ferre sale had been in the works for a long time in one of Italian fashion's more complicated relationships. Until Mattioli sold his 21 percent stake to GTP last year, both partners had each held 49 percent of the company, with the remaining 2 percent held in a trust.
In the event that one partner sold all or part of his stake, the 2 percent was to be bounced to the partner who remained at Gianfranco Ferre SpA.
Not surprisingly, Mattioli had a difficult time finding a buyer for his stake: few companies on the hunt for acquisitions were willing to take a minority share in the fashion house. In addition, Ferre had full veto power over any of the pretenders to Mattioli's stake -- which he fully exercised.Marzotto, Holding di Partecipazioni Industriali and the new fashion group Fin.part were among the buyers interested in the company, but Ferre said repeatedly that he was interested in a "financial partner" and not a company in the fashion business.
To make matters worse, relations between Ferre and Mattioli had deteriorated to the point where each was slapping the other with lawsuits stemming from their collapsed partnership, and they had stopped speaking to one another. Asked about his relationship today with Mattioli, Ferre responded that they communicate through their lawyers.
However, said Bensoussan, "in the end everyone came together for the good of the company."
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