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Italian Firms Weigh Delisting

MILAN — Italy’s hottest fashion commodity used to be the initial public offering. But as share prices have slumped, the stock market is losing its appeal — and there’s even talk that some fashion and retail companies could...

MILAN — Italy’s hottest fashion commodity used to be the initial public offering. But as share prices have slumped, the stock market is losing its appeal — and there’s even talk that some fashion and retail companies could delist altogether.

Bulgari, Mariella Burani and department store chain Coin have all denied speculation that they plan to flee the Milan stock exchange, although Burani acknowledged that some investment banks have approached it with a proposal for a management buyout.

The IPO boom of past years has no doubt dried up — just ask Patrizio Bertelli, who this summer pulled the plug on a Prada offering for the third time. A cooldown in consolidation could force investment banks to seek other means of generating commission.

“There are always investment bankers that approach companies with the idea of a delisting,” said Centrosim analyst Andrea Paladini. “It’s normal, but these rumors get stronger when the markets aren’t going well.”

Taking a company off the stock exchange could also be seen as a defensive move. Stock prices have plunged so far that some firms may fear becoming acquisition targets.

But analysts doubted that many Italian companies would resort to a full-fledged buyout. In most cases, one or more families already have a controlling stake in a company and they could easily and more cheaply boost their stake by buying up shares on the market.

Armando Branchini, vice president of Milan-based consultancy InterCorporate, said it would be illogical for companies to exit the stock market now. If they are pessimistic that things will only get worse, it would make more sense to wait until it would cost even less to buy back the float.

While some companies may be second-guessing the decision to go public, Branchini said he thinks most companies will conclude that the stock market “gives more advantages in the long run.”

Analysts said public firms tend to enjoy a higher visibility, as well as better access to fresh capital and potential partnerships.

“For sure, I don’t think companies like Mariella Burani and Bulgari will [delist] in the medium-term,” Paladini said.

Francesca Rulli, an analyst with Banca Leonardo in Milan, agreed: “It is more likely that companies will buy back some of their shares on the market or issue extraordinary dividends to support their share prices. Delisting seems improbable.”

Branchini also noted that a company that chooses to delist is bound to have a tough time regaining investors’ trust for a new IPO down the road.

However, one Italian retailer is already destined to disappear from traders’ stock terminals. In October, the Agnelli family and French supermarket chain Auchan SA announced plans to buy the 41.4 percent of La Rinascente SpA they don’t already own. As a result, the retailer that controls the famed department store next to Milan’s Duomo, as well as a large chain of supermarkets, will be delisted.

But that deal may be more of a strategic move than a flight from a slumping stock price. The Agnellis and Auchan said the delisting would make it easier for them to form “agreements and financial and industrial alliances.”