MILAN — Roberto Cavalli is closer to selling a majority stake in his namesake brand, with the deal expected to be completed in mid-October.
The Italian designer has signed a letter of intent to sell a 60 percent stake in his company to VTB Capital, according to market sources, confirming a WWD report last month. The eventual goal is to launch an initial public offering in four to five years, WWD has learned.
VTB Capital is part of VTB Group, a major Russian investment bank, but it’s understood that it is acting for a Cyprus-based fund. The identity of the fund could not be learned at press time.
The price tag is pegged at 500 million euros, or $656.5 million at current exchange. The deal values the Cavalli brand at 830 million euros, or $1.1 billion. This 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 in Paris, which may eventually clip the deal’s final price as the designer is said to have kept ownership of this asset.
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. A deal to sell a 30 percent stake to private equity firm Clessidra SGR SpA broke down in 2009 for that reason. At the time, sources said Cavalli was looking to sell for 1 billion euros, or $1.31 billion. Talks with private equity fund Permira cooled earlier this year, possibly triggering the sudden departure of Cavalli chief executive officer Gianluca Brozzetti and chief operating officer Carlo Di Biagio, a former Procter & Gamble Co. finance director, in January. Brozzetti, who held previous executive roles at Asprey, Bulgari, Gucci Group and Louis Vuitton, joined Cavalli in September 2009 from Finnish yacht builder Nautor’s Swan and had been a consultant for two years during Cavalli’s negotiations with Clessidra.
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 this round of negotiations, Permira was willing to pay 450 million euros, or $591 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 as VTB Capital outbid the Italian fund. Bahrain-based Investcorp, the former owner of Gucci and Saks Fifth Avenue, was also said to be looking at Cavalli in this round of sale negotiations.
Daniele Corvasce, a counselor and corporate legal affairs director at Cavalli, has been filling the ceo role ad interim, sharing duties with the designer himself. A new ceo is likely to step in once the deal is completed.
VTB Bank is headed by president Andrey Kostin, who is also deputy chairman of petrol firm Rosneft, which took a stake in Italy’s giant tire manufacture Pirelli earlier this year. VTB Capital is relatively new to the fashion scene. One of three divisions of VTB Group, the firm is based in Moscow with offices in London; New York; Hong Kong; Dubai; Singapore; Vienna; Kiev, Ukraine, and Sofia, Bulgaria. According to its Web site, the company advised on more than 20 mergers and acquisitions transactions in Russia last year.
Brozzetti helped streamline the company’s structure and grow it internationally — and Russia is said to be a strong market for the brand.
Cavalli celebrated its 40th anniversary in 2010 — the year it returned to the black. The firm had been hurt by financial troubles at Ittierre SpA, the former Just Cavalli licensee, which entered government-backed bankruptcy protection in February 2009. The Just Cavalli brand picked up again after Cavalli signed a license with Staff International in January 2011, which was extended in March until 2031. The company operates 44 Just Cavalli stores.
In addition to a license with Marcolin SpA for eyewear, and a full-fledged home collection, among other agreements, in July 2010 the company signed a deal with Coty Prestige to produce and distribute fragrances for the Roberto Cavalli and Just Cavalli brands.
The designer, who turns 74 in November, in a WWD interview in 2010 to mark the company’s 40th anniversary, described himself as more of a “fashion artist” than a fashion designer. “Don’t ask me to sketch or fit a mannequin, that’s never been my style,” he said at the time. His sexy and feminine designs, jungle-prints and bejeweled distressed jeans have caught the eye of countless celebrities in the film and music industries. Case in point: Sofía Vergara wore the designer’s white, curve-hugging gown at the Emmy Awards last month. Vergara joins other celebrities who have worn his designs, ranging from Beyoncé and Jennifer Lopez, who both donned Cavalli’s clothes on stage, to Kate Hudson, Rihanna, Sharon Stone and Penélope Cruz.
The designer has also been building the brand’s lifestyle component. In 2001, he made the iconic Caffè Giacosa in Florence a part of his boutique. He has since opened Cavalli Clubs and Caffés in cities including Florence and Saint-Tropez, along with additional spots managed through licenses in Kuwait City, Beirut, Dubai and New Delhi. In addition, the company also counts two Cavalli Clubs in Milan and Dubai under license, as well as a Cavalli Restaurant & Lounge in Miami and Ibiza.
Cavalli’s personal life mirrors that of his glitzy designs. He regularly holds parties at the Cannes Film Festival on his luxurious metallic yacht, on which the designer sails the Mediterranean each summer. His sprawling villa on the hills surrounding Florence has served as a set for some of his ad campaigns over the years.
Cavalli’s printing skills and techniques were first applied to finished sweaters that he made for other brands in the Sixties. Flowers, ribbons and a first taste of animal prints were his favorite motifs and eventually a Dalmatian-spotted rendition grabbed the attention of Krizia’s Mariuccia Mandelli. Guido and Odette Molinari, the parents of Blumarine designer Anna Molinari, and, later, Hermès also placed orders for Cavalli’s prints. In the Seventies, he traded yarns for leather, proving to be an innovator and receiving requests for exclusives from Mario Valentino and Hermès. In 1970, he decided to do his own collection and created 30 pieces, which he presented at the ready-to-wear showcase in Paris held at the Porte de Versailles.
“By printing swimwear and dresses, I was the first to treat leather like a ready-to-wear fabric,” the outspoken and often flamboyant Cavalli has said. In 1972, he opened a small shop called Limbo in Saint-Tropez, which was so successful that the following year he was invited to show his leather wares in the storied Sala Bianca in Florence alongside Armani, Missoni, Krizia, Fendi and Basile.
Cavalli has three children with his wife, Eva: Rachele; Daniele, who collaborated with his parents on the men’s collections and left the company earlier this year, and Robin. Cavalli also has two older children from his first marriage to Silvanella Giannoni: Tommaso, who manages the Cavalli-owned vineyard Tenuta degli Dei in Tuscany, as well as the wine and spirits business, and Cristiana, a former ceo at the family’s fashion company.