PRADA REPORTEDLY NOT A TOPIC AT GUCCI’S ANNUAL MEETING
Byline: Samantha Conti
MILAN — Prada, Gucci’s new significant shareholder, kept a low profile at Gucci’s annual meeting Wednesday, where investors extended the deadline of a share buyback plan and voted to give management additional stock options amounting to 5 percent of Gucci capital.
“Our shareholders have shown their support for our moves to increase the value of the company and our initiatives regarding Gucci’s long-term development,” said Gucci chairman and chief executive officer Domenico De Sole in a statement.
De Sole declined to talk to the press after the meeting, which took place in Amsterdam, where Gucci Group NV has its corporate headquarters. The meeting was for shareholders only; the press was barred.
Sources said Marco Salomoni, a managing director of Prapar BV, the parent company of the Prada Group, attended the assembly in place of Prada’s owner Patrizio Bertelli. As reported, in a surprise move earlier this month Prada announced that it had accumulated a 9.5 percent stake — 5,645,135 shares — in Gucci. Prada now is believed by analysts to be Gucci’s largest shareholder, although Gucci has not confirmed that.
The sources said De Sole declined to answer questions regarding Prada during the assembly. Prada issued no statements and would not comment after the assembly.
However, Gucci later in the day issued a noncommittal statement that after the stockholders meeting, the supervisory board discussed that Prada had acquired a 9.5 percent stake in the company on an unsolicited basis. It reiterated that “the company is not in discussions with the Prada group and does not have any information regarding Prada’s intentions other than as set forth in Prada’s public filings.”
“As a result of its deliberations and consistent with the supervisory board’s long-standing commitment to shareholder value for all shareholders, the supervisory board confirms that it is reviewing all of its strategic alternatives,” Gucci said.
Prada’s Salomoni was among some 100 shareholders who attended the meeting. Gucci has thousands of small shareholders, but the shareholders in attendance held about half of the company’s capital.
“I think the fact that things ran smoothly today is overall good news for Gucci,” said Andrea Ruggeri, an equities analyst at Goldman Sachs in London.
A Gucci spokeswoman later said the assembly reconfirmed De Sole as Gucci chairman and ceo, casting 28,496,965 shares in favor, 81,251 against, with 64,525 abstentions.
Analysts repeatedly describe De Sole as a strong manager and say that he has shown outstanding leadership guiding Gucci through the crisis in Asian markets.
As reported, Gucci’s results for the first quarter ended April 30, while down from a year ago, beat analysts’ estimates, with net income off 10.2 percent to $43.1 million, and total revenues dropping 1.4 percent to $250.7 million.
On Wednesday, investors also voted with 26,906,290 shares in favor of increasing management’s stock options, with 1,667,661 votes against and 68,791 abstentions.
Gucci’s management will now have additional options of 3.1 million share options — or roughly 5 percent of Gucci’s capital — to add to an existing 4.9 percent in options.
Gucci shareholders also voted to extend the company’s stock buyback program from its original end-date of January 1999 until Dec. 24, 1999.
That program, announced in November 1997, made way for the purchase of up to three million shares. Gucci has so far bought back about two million shares with money from the company cash flow.
At the time, analysts said the buyback plan was aimed at stabilizing Gucci’s share price, which had bounced up and down during the months following the outbreak of the Asian crisis last fall. On the New York Stock Exchange Wednesday, Gucci stock closed at 53 9/16, off 1 9/16.
Industry sources said Prada voted to approve the increase in company stock options and Gucci’s 1997 accounts, which showed net income of $175.5 million on net revenue of $975.4 million. The sources said Prada abstained, however, from the vote to extend the buyback deadline.
“Prada’s behavior at the assembly could mean anything,” said Ruggeri. “What happened today doesn’t really tell me any more about what Prada plans to do. My one point of reference remains the 13-D form that Prada filed to the SEC, which makes it clear that they are leaving all their options open.”
As reported, Bertelli said earlier this month he bought $260 million worth of shares in Gucci as a “strategic investment, taking into consideration financial opportunities as well as possible developments in the sector with particular reference to [Gucci].”
In the 13-D form, Bertelli left all his options open, saying he may, depending on market conditions, “consider and explore…a variety of alternatives with respect to [Gucci], including…an extraordinary corporate transaction, such as a merger, reorganization or liquidation of the company,” as well as joint ventures or “any other material change in [Gucci’s] business or corporate structure.”
He said, however, that he had no immediate plans or proposals with respect to these matters.
At the meeting, Gucci shareholders approved a dividend of 40 cents per ordinary share, which will be paid as of July 2. Gucci’s supervisory board was also increased from six to eight members. The newcomers include Barbara Turf, president of Crate & Barrel, and Keisuke Egashira, former chairman of Chrysler Japan.