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MILAN — Prada and private-equity fund Equinox Management Co. SA struck a preliminary agreement Friday calling for Equinox to acquire 45 percent of the Church’s Group, the high-end English footwear firm, from Prada Holding. Terms were not disclosed.
This story first appeared in the April 21, 2003 issue of WWD. Subscribe Today.
News of the pact followed growing speculation Prada aims to sell some of its assets, in a bid to reduce its debt of $827.6 million, now that plans for a public offering are on hold.
In a joint statement Friday, Prada and Equinox projected the deal will fuel growth of the Church’s brand, acquired by Prada in 1999. The Equinox investors include Gruppo Pirelli, Banca Intesa, and Diego Della Valle — an irony as, four years ago, Della Valle battled unsuccessfully with Prada Group chief executive officer Patrizio Bertelli for control of Church’s.
The Equinox investor group purchasing the Church’s stake is not related to the privately held Equinox Luxury Holdings Ltd., which owns footwear firm Jimmy Choo.
In a statement, Bertelli said, “Prada has concluded the restructuring and relaunching phase of Church’s. Now, an agreement with Equinox, which has experience in development financing, will allow us to execute an important growth plan for one of our most prestigious brands, accompanied by an expansion of its product offering.”
Expansion of Church’s is contemplated by increasing the brand’s presence in Europe, the U.S., and Asia, and by introducing Church’s first apparel and accessories lines, Prada and Church said in the statement. The agreement also calls for Prada to guarantee the creative, managerial, distribution and financial resources to develop Church’s.
Bertelli could not be reached for further comment Friday.
Timing of the deal’s anticipated closing could not be learned at press time. Prada was assisted in the arrangement by Lazard & Co., and the law firm of Gianni, Origoni, Grippo & Partners. Equinox was advised by the law firm of Bonelli, Erede, Pappalardo.
Prada’s pact with Equinox for the stake comes on the heels of reports that Prada is feeling the heat from Deutsche Bank — one of Prada’s biggest lenders — to reduce its debt load by selling some assets, as noted in WWD. According to one source, Prada could sell Jil Sander, Helmut Lang and/or Azzedine Alaïa. Prada has repeatedly denied those possibilities, but has admitted it is working to sell some real estate assets to generate cash.
Full-year results for Jil Sander, reported by Prada last week, showed Sander’s consolidated net loss more than doubled versus a year earlier, to reach $28.3 million. That loss forced Bertelli to inject fresh cash into Sander.
Speculation regarding the Sander business that surfaced last week ranged from a return of Sander to the firm — which she sold to Bertelli in 1999 and left three years ago — to a purchase of the business by Hugo Boss. Marzotto, which has control of Hugo Boss, denied this rumor, and last Thursday a Prada spokesman told WWD there were “no new developments in the relationship” between Sander and Prada.
When Bertelli famously outbid Della Valle for control of Church’s four years ago, the luxury goods sector was booming, with companies regularly posting double-digit sales growth. Bertelli was lured by the tradition of quality at Northampton-based Church’s, a company dating back to 1873. In order to take control of the footwear business, he paid 26.5 times its annual net earnings, shelling out $175.5 million the same week he agreed to buy 51 percent of Fendi in a joint venture with LVMH Moët Hennessy Louis Vuitton.
Despite difficult times for the luxury sector, Bertelli has been busy buying and selling upscale names. He sold his Fendi shares to LVMH in 2001, but that same year, he bought the Genny and Byblos brands. In 2002, Bertelli sold Byblos to Italian Swinger International. In addition to Sander, Lang, Genny, Alaïa, and Church’s, Prada owns Car Shoe.
Since 1999, Prada has streamlined Church’s distribution and updated the product, while maintaining its classic craftsmanship. Today, there are 45 Church’s stores worldwide. The footwear firm’s sales last year tallied $65.2 million. (The dollar figure was converted at the current rate of exchange.) Church’s employs nearly 700, and maintains 95 percent of its production in England, with the rest in Italy, where it makes women’s footwear.