MILAN — The euro may have trumped the ruble in the Roberto Cavalli group sale.

This story first appeared in the December 18, 2014 issue of WWD. Subscribe Today.

In a surprising turn of events, Cavalli now is in talks to sell a significant majority stake to Italian private equity firm Clessidra SGR SpA for an undisclosed sum. The Florence-based designer had been in negotiations for months with the Russian firm VTB Capital, with a deal initially expected to close last fall.

Sources said Clessidra could buy up to 90 percent of the fashion house. Upon completion of a deal, Francesco Trapani would become president of the Cavalli company, while the designer would remain a shareholder and help the new team develop the brand. The deal is expected to be finalized in the first quarter of 2015. Financial details were not disclosed, but the VTB deal valued Cavalli at more than $1 billion.

This is not the first time Clessidra has looked at the Cavalli dossier. A deal to sell a 30 percent stake to the equity firm broke down in 2009 over the value of the fashion brand. Over the past year, Permira and later VTB Capital, part of Russian investment bank VTB Group, were engaged in negotiations with Cavalli, but those deals never materialized.

Trapani, executive vice chairman of Clessidra, joined the equity firm as a shareholder and operating partner in April with the aim of helping boost investments in the fashion and jewelry industry. He left his position as chairman of LVMH Moët Hennessy Louis Vuitton’s watches and jewelry division a month earlier. The executive assumed that role in 2011 when the French luxury conglomerate acquired Bulgari, where he had been chief executive officer. He remains a member of the LVMH board and adviser to chairman Bernard Arnault on the group’s activities.

Trapani is the great-grandson of Bulgari founder Sotirio Bulgari. He helped transform Bulgari, which he joined in 1981, from a small jewelry company into a leading group with a turnover of 1 billion euros, or $124 billion at current exchange rate. Trapani was instrumental, more than a decade ago, in buying and integrating top suppliers such as Gérald Genta and Daniel Roth, and the labels’ production facilities, Manufacture de Haute Horlogerie SA, which has allowed Bulgari to produce watches entirely in-house. Trapani also spearheaded Bulgari’s expansion in fragrances, the brand’s hotel venture and investments in handbags and accessories, tapping Matthew Williamson to design capsule collections in that category, for example. He then helped complete the integration of the jewelry firm within LVMH.

Last year, Clessidra bought a 70 percent stake in Milanese jewelry firm Buccellati. In September, Buccellati tapped Gianluca Brozzetti as its new ceo. Brozzetti held the same position at Cavalli, which he left in January. In October, Clessidra finalized an agreement to take a 35 percent stake in Harmont & Blaine SpA, which will be used to support the sportswear brand’s growth around the world and strengthen its managerial structure.

Market sources speculate that a Cavalli deal with Clessidra could result in a new designer being brought in to help the brand. The industry’s musical chairs have seen Marco Zanini leave Schiaparelli in November and Guillaume Henry join Nina Ricci from Carven, where Alexis Martial, creative director of Iceberg’s women’s wear line, is rumored to be headed. Last week, news of the exit of Frida Giannini from Gucci, due in February, stirred a swirl of rumors around potential successors. Peter Dundas, a veteran of Cavalli and Emilio Pucci’s artistic director since 2008, was identified by sources as a possible contender for Gucci, but the designer often has been mentioned as a possible candidate for Cavalli over the past year during the sales negotiations. His sexy and feminine designs are in synch with Cavalli’s own sensibilities and style, making him an ideal candidate, according to several market sources.

Last month, when talks between Cavalli and VTB Capital hit a bump, a wistful Cavalli expressed concerns to WWD about his future and that of his brand, noting that it had “been difficult to understand the real intentions of these strange buyers,” referring to the Russian bank. “I have grand projects in mind — this is also the reason that pushes me to wait, to be confident of a sure thing with sure partners,” concluded Cavalli.

After WWD broke the news of the negotiations with VTB in August, the deal was expected to be completed in mid-October but was then pushed back to November. As reported, the Italian designer had signed a letter of intent to sell a 60 percent stake in his company to VTB, with the eventual goal of launching an initial public offering in four to five years, according to sources.

Sources say VTB struggled to secure the necessary funds, hurt by the international sanctions on Moscow for its role in the Ukraine crisis. It also may have been impacted by the resulting devaluation of the ruble and the weakening Russian economy, which has only gotten worse as global oil prices have nosedived. VTB Group was understood to be acting for a Cyprus-based fund. The price tag was pegged at 500 million euros, or $624 million at current exchange. The deal valued the Cavalli brand at 830 million euros, or $1.03 billion. This amount represents four times the firm’s sales in 2013 and more than 22 times its earnings before interest, taxes, depreciation and amortization last year.

In 2013, the Florence-based firm reported sales of 201 million euros, or $265.3 million at average exchange, up 9.3 percent compared with the previous year. Net profit last year dropped to 159,000 euros, or $209,880 at average exchange, from 359,000 euros, or $459,520, in 2012. EBITDA last year totaled 22.4 million euros, or $29.5 million. The company has not reported results for the first half of 2014.

At the end of 2012, the company had 179 stores, of which 90 were under the designer’s signature brand. Of these, 44 are directly owned, including Cavalli’s prestigious Rue du Faubourg Saint-Honoré boutique.

The value of the company has been a thorny issue for years, and the designer is said to have backed out of previous negotiations over price. The deal to sell a 30 percent stake to Clessidra broke down in 2009 for that reason. At the time, sources said Cavalli was looking to sell for 1 billion euros, or $1.25 billion. Talks with Permira cooled earlier this year, possibly triggering the sudden departure in January of the-then ceo Brozzetti and chief operating officer Carlo Di Biagio.

In 2006, Cavalli seemed close to a deal with Saudi Arabian private equity fund SAB Capital, which submitted a bid for 60 percent of his business, but the designer pulled out of the talks. During that round of negotiations, Permira was willing to pay 450 million euros, or $561.5 million, for the group, sources said — a price tag Cavalli rejected. Permira recently made an offer for the entire company, but an agreement was never reached because VTB outbid the Italian fund. Bahrain-based Investcorp, the former owner of Gucci and Saks Fifth Avenue, also was said to be looking at Cavalli in the latest round of sale negotiations.

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