MILAN — Another historic Italian group is set to change hands and become part of a foreign conglomerate.
A source close to shareholders of La Rinascente said the board is expected to approve the sale of the high-end department store chain to Central Retail Corp., a giant retail group from Thailand, today. This comes following the decision of a Milan judge on Thursday to dismiss La Rinascente chairman Maurizio Borletti’s request to halt the sale of the chain to CRC. The entrepreneur had requested the confiscation of the 96 percent stake of La Rinascente he does not own, waiving his preemption rights.
La Rinascente’s board ratified the sale procedure in mid-May. CRC’s offer of 250 million euros, or $351.7 million at current exchange, expires on June 2. The source said the majority shareholders “will accept it because they were all in favor last time, pending the judge’s decision.”
According to a legal source, judge Vincenzo Perozziello questioned Borletti’s rights, saying that he claimed them “too late.” Perrozziello also believed “the sale procedure was correctly managed and legitimate,” and that there “were no elements to grant a confiscation,” according to the source.
Borletti, an heir of the founder of La Rinascente, owns 4 percent of the chain. The other owners are investment fund Investitori Associati, Deutsche Bank’s RREEF and real estate developer Prelios (formerly called Pirelli Re).
“It’s obvious I feel wrong-footed by this decision,” Borletti told WWD. “I did all I could to keep this company under Italian leadership.” The entrepreneur said he feared this is “not an isolated case,” with Asian firms progressively “colonizing” European companies and their know-how to differentiate their investments in politically stable regions.
In February, Borletti, who is also one of the owners of Printemps stores, turned to Italian law to contest the procedure of the sale of La Rinascente, saying that he “was not given the opportunity to conduct due diligence and was negated access to La Rinascente’s data room” by the other shareholders. Borletti won the first round and was granted access to the documents in March, with an eye toward putting a deal together to buy out some of the other shareholders. Borletti has been trying to gather a group of investors to buy the chain, including Italian firm Tamburi Investment Partners, which called La Rinascente “an amazing asset” but commented that Central Retail’s offer was “a bit high.”
Borletti now has the opportunity to appeal to a counsel of three judges within a month, but, even if he were to be successful, a new owner would be in place by then. “It made sense to ask for custody of the shares as there is at this [moment] no certainty on the ownership of these,” he said.
Also in the mix are arbitration proceedings set into action earlier this month by Borletti, who claimed that there were violations of certain shareholder agreements. If proven true, this could allow him to buy the company at a 25 percent discount as well as receive 40 million euros, or $56.2 million at current exchange, in damages. However, this procedure may take up to two years, and, in case of a victory, Borletti lamented the fact that he would take control of “an empty box. ”
“Financially, this sale would be a deal for shareholders, who will gain four times their original investment five years ago, and even I will benefit from it. That said, as an entrepreneur, I think we’ve done a lot with the stores, but the company has still a lot of potential and I think we should be allowed to complete the job,” said Borletti, who is forced to exit La Rinascente under the terms of the sales agreement.
La Rinascente was founded in Milan in 1917 with the first store opposite the city’s imposing cathedral and at the heart of Milan’s shopping streets and tourist attractions.
Borletti and the other shareholders took control of the store chain five years ago and moved La Rinascente upmarket, planning the renovation of several stores and adding luxury brands like Gucci, Louis Vuitton and Salvatore Ferragamo. Vittorio Radice was tapped as chief executive officer of the group to revamp the stores.