The Moncler shop on the fourth floor.

MILAN — Will it or won’t it? The year 2019 closed without a definite answer on whether Kering will buy Moncler and market sources contend the price has been a stumbling block, slowing down the alleged negotiations.

According to a source, who believes Kering is seriously considering a takeover of Moncler, the deal could be in the range of 13.5 billion euros to 14 billion euros, a 30 to 40 percent premium on the outerwear brand’s capitalization of 10 billion euros.

Moncler’s chairman, chief executive officer and shareholder Remo Ruffini toned down the speculation in December, stating that he “would like to clarify that from time to time he maintains contacts and interacts with investors and other sector participants, including the Kering group, in order to explore strategic potential opportunities to further promote the successful development of Moncler. At the moment, there is not any concrete hypothesis under consideration.” Kering had no comment on the rumors.

The speculation arose shortly after the Tiffany & Co. acquisition by LVMH Moët Hennessy Louis Vuitton in a blockbuster $16.2 billion agreement and several industry observers saw Kering’s move as a response to that deal.

Flush with cash, Kering has been at the center of several M&A rumors, and was said at one time or another to be circling Salvatore Ferragamo, Valentino and Versace, which was sold to Michael Kors Holdings Ltd., now Capri, in 2018.

Surely M&A activities remain brisk.

In their study “M&A: What’s next?” Morgan Stanley analysts Elena Mariani and Edouard Aubin said “it is increasingly clear that the polarization of the luxury goods industry is accelerating, with conglomerates/large brands outperforming the overall industry, while a number of smaller brands/monobrands are not showing momentum.” They attributed this to operational synergies but, even more, to an ability to attract, retain and promote talent.

Mariani and Aubin expect more consolidation in light of the very low cost of borrowing; the strength of the top five players’ balance sheets, which they estimate have “never been stronger over the past 20 years;” the operational synergies groups can generate and the finite number of potential targets.

Morgan Stanley sees “a very limited number of potential targets” and groups such as LVMH and Kering “have shown less interest in acquiring small brands in recent years.” Mariani and Aubin do not see “any particular rush to sell” among the privately owned companies and imagine “consolidation will be a relatively slow process.” Rather, they see adjacent categories being of interest, from luxury autos, fine wines and spirits, to luxury hospitality, eyewear and prestige cosmetics. “Of all these categories, eyewear and cosmetics seem to be areas that would most likely be of interest as conglomerates already have some involvement in them.”

Former Bulgari and LVMH executive Francesco Trapani, who also served as a board director of Tiffany, during a talk in December staged by Italian daily Corriere della Sera, said “the creation of these conglomerates was favored in France because there are luxury companies that were passed down from generations while in Italy we have firms still helmed by their founders.”

Conversely, creating a conglomerate in Italy today is “substantially impossible,” according to Trapani, because there are few independent companies left in the country and these don’t have the financial assets to compete with luxury powerhouses in taking over key brands. When he was chairman of private equity Clessidra SGR from 2014 to 2016, Trapani spearheaded the acquisition of the Roberto Cavalli brand in 2015. This was then sold to Vision Investment Co. LLC, controlled by Hussain Sajwani, founder and chairman of the Dubai-based Damac Properties Group.

Elio Milantoni, partner of Deloitte Financial Advisory & Corporate Finance, said investments in 2020 are expected to be focused on the cosmetics and fragrance sector, together with the apparel and accessories businesses, underscoring the importance of personal luxury for private equity funds.

According to the Deloitte Global Fashion & Luxury Private Equity and Investors Survey 2019, 70 percent of the investment fund managers that were interviewed are mulling investments in the luxury market in the next few years.

OTB, which controls DieselMaison MargielaMarni, Viktor & Rolf and production arms Staff International and Brave Kid, was also interested in buying the Cavalli brand, as Staff International is Just Cavalli’s licensee. In July, OTB, founded by Renzo Rosso, increased its stake in Viktor & Rolf to 70 percent from 51 percent, which it had acquired in 2008, and in June it bought a stake in Amiri, the Los Angeles-based brand founded by Mike Amiri. With a net financial position totaling 111 million euros, ceo Ubaldo Minelli said last year there could be some M&A activity ahead.

After several months of speculation, in September, Richemont acquired Buccellati from Gangtai Group, which had acquired the Italian jeweler at the end of 2016.

Rumors also continue to swirl around Etro, although the namesake family that owns the company has denied it is for sale. Speculation about Qatar-based Mayhoola looking at selling Valentino and maybe divest from its fashion investments, which also include Balmain and men’s label Pal Zileri, have been fizzling, also in light of talk that former Prada and Gucci executive Jacopo Venturini is joining Valentino in a  top position, most likely succeeding ceo Stefano Sassi.

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