MILAN — Brunello Cucinelli has inked his first M&A deal, although the entrepreneur typically shied away from that definition, rather calling it “an operation of gratitude.”
On Monday, Cucinelli revealed that his namesake company is buying a 43 percent stake of Cariaggi Lanificio S.p.A., its longtime cashmere supplier.
“Exactly 44 years ago around this time, I pulled up at Cariaggi’s plant with a small truck, asking for 20 kilograms of cashmere to launch my business. I was a long-haired 25-year-old but I had no money and [founder] Aurelio Cariaggi told me he would help, he gave me the cashmere and said I could pay him when I had the means to,” recalled Cucinelli. “My dream was to start my cashmere pullover brand and without Cariaggi I would not be here, his faith in me made me feel like a young lion. Cariaggi was the source of my economic sustenance. Gratitude for me lasts a lifetime,” he added, citing the aphorism that states the opposite.
The purchase price was pegged at over 15 million euros, “proportionally close to the current net worth of Cariaggi Lanificio,” and entirely self-financed.
Control and day-to-day management of the company will remain in the hands of the Cariaggi family, which holds 57 percent of the shares.
Cucinelli explained that Cariaggi is solid and profitable and that he is buying the stake owned by Arnaldo Caprai.
“The acquisition will help guarantee the supply and quality of the cashmere we employ, support the Made in Italy pipeline and provide a future for the second generation and third generation of both my company and that of Cariaggi, and for this wonderful fiber that we call ‘golden fleece’ for decades to come, thus contributing to improving the living conditions of our people,” continued Cucinelli.
Cariaggi is known for its top quality cashmere and is headquartered in Cagli, a one-hour drive from Solomeo, where Cucinelli is based.
Yearly, cashmere accounts for around 60 percent of Cucinelli’s knitwear production and 95 percent of it is supplied by Cariaggi.
Cucinelli, who holds the role of executive chairman and creative director of his company, said Cariaggi is “one of the jewels of Italian manufacturing, with products of great quality and craftsmanship; there is no doubt that it should be counted among the first industries in the sector in the world, if not the first, and that it represents something important for our territory and its culture.”
“We are very pleased to have completed this acquisition, which will allow the company to continue developing products of excellence,” said Piergiorgio Cariaggi, chief executive officer of Lanificio Cariaggi Cashmere. “We are more than happy with the agreement with Brunello Cucinelli S.p.A., our longstanding customer, with whom we share a vision of quality, service, innovation and a focus on our people, commitments that have always featured in our company, recognized worldwide as an excellence.”
The acquisition is the latest in a brisk M&A activity in Italy’s supply chain, further triggered by the impact of the COVID-19 pandemic and much of it meant to support the know-how and craftsmanship of the country’s fashion pipeline.
For example, last year, the Prada and Ermenegildo Zegna groups joined forces to acquire a majority stake in Filati Biagioli Modesto SpA, which specializes in the production of cashmere and other precious yarns, sharing the goal to ensure continuity of the excellence of the company and to develop their own Made in Italy production chain. The acquisition came a few weeks after Zegna bulked up its textile division with the takeover of Tessitura Ubertino.
It is similar to the rationale behind Gruppo Florence, the luxury production pole established in 2020 by industry veteran Francesco Trapani through private equity fund VAM Investments together with Fondo Italiano d’Investimento and Italmobiliare. The goal is to supply high-quality Made in Italy products to major luxury fashion brands by acquiring family-owned Italian SMEs.
Trapani has said he expected the pole to quickly become the primary point of reference for Made in Italy production, building a rich portfolio including, for example, knitwear manufacturer Metaphor.
Last week, reporting its fourth-quarter and year-end results after the close of the Milan Stock Exchange, Cucinelli said that despite the war in Ukraine and the pandemic, he was confident the company will achieve its 10-year goal unveiled in 2019, expecting to double revenues by 2026 rather than 2028 as originally planned.
In 2021, net profit totaled 56.3 million euros compared to a loss of 32.1 million euros in 2020 and a profit of 53.1 million euros in 2019. Revenues last year amounted to 712.2 million euros, up 30.9 percent compared with 2020, and 17.2 percent higher compared to the pre-pandemic year of 2019.