GEMINA, MARZOTTO SAID TO BE NEGOTIATING TAKEOVER OF GFT, FILA
Byline: Sara Gay Forden / Samantha Conti
MILAN — Pietro Marzotto, chairman of his family textile and apparel company, could be the kingpin in the biggest takeover ever in Italy’s designer clothing business.
Industry sources say Gemina SpA, the investment company that controls Italy’s designer giant GFT SpA, wants Marzotto to make GFT a powerhouse once more.
Reportedly, Gemina, which itself is controlled by the Fiat group, has offered to turn over its holdings in GFT and Fila, the activewear company, to Marzotto, in return for a stake in the new, expanded group.
If the deal goes through, it could create a clothing colossus with combined revenues of $3 billion (5 trillion lire) and an unmatched portfolio of lines by some of the world’s top designers: Giorgio Armani, Gianfranco Ferre, Nino Cerruti, Calvin Klein, Missoni, Valentino and Emanuel Ungaro.
Through the deal, Gemina reportedly hopes to reap the benefits of Marzotto’s management savvy and insure its investment in GFT, which has just begun its path to recovery.
“Pietro Marzotto and Jean de Jaegher [Marzotto chief executive officer] are considering the proposal,” said a source close to the negotiations. “The plan intrigues them; the one thing they’re worried about is what the bottom line would be in the first five years.”
The source added that Gemina approached Marzotto in November and that a decision should come by the end of March after Marzotto completes its due diligence.
“If talks drag on longer, it probably won’t happen,” the source said.
Marzotto and Gemina denied that any talks were taking place.
But rumors have been building, and stock market analysts are watching. Marzotto and Gemina shares have risen steadily against the market trend since November. Marzotto stock is up 57 percent since then and on Wednesday closed at 12,850 lire — or about $7.70 — a share, while Gemina closed at 975 lire — or 58 cents — up 43 percent from November.
Analysts say the stocks’ speedy rise is unusual, given market conditions.
“Someone out there knows something the rest of us don’t,” one analyst said.
Sources said that Milan’s powerful merchant bank, Mediobanca, is masterminding the prospective deal. This comes as no surprise, as Mediobanca has brokered most of Italy’s big financial operations for almost a half century, and it arranged the sale of GFT to Gemina in December 1994. Mediobanca holds a 13 percent stake in Gemina, while Marzotto holds a minority stake in the bank and Pietro Marzotto sits on its board of directors.
Mediobanca officials declined to comment.
Gemina bought a troubled GFT in a last-ditch effort to keep ownership of the once-prestigious company in Italy. Few believed Gemina would hold GFT for very long. GFT, which was founded by Turin’s Rivetti family in the late 1800s, led the designer boom of the Eighties, only to fall on hard times as consumers’ buying patterns shifted and demand plummeted in the early Nineties.
After the Rivettis put GFT on the block in early 1992, a stream of potential buyers came and went for two years. In the turmoil, a series of managers did little to put the company back together.
Gemina brought in managing director Angelo Barozzi in March 1995 to spearhead a thorough restructuring. Under Barozzi, GFT sold its 51 percent stake in German clothing group Baumler; restructured several of its licenses; closed down nonperforming company brands; launched a new diffusion collection, Cerruti Bros.; laid off workers, and closed money-losing plants in Spain and in Asti, Italy.
GFT proudly announced a return to the black in 1995, with a net profit of $11 million (18.4 billion lire) on revenues of $990 million (1.65 trillion lire). However, industry experts say GFT’s troubles are far from over. The European market is still in the doldrums, orders have dropped 20 percent and many of GFT’s new projects haven’t gotten off the ground.
Gemina is targeting Pietro Marzotto precisely because of his track record of turning companies around. In addition, he crowned a string of successful acquisitions in the textile and apparel sectors with the 1991 purchase of a controlling stake in Hugo Boss.
“Marzotto will allow Gemina to come out smelling like a rose,” said one source. Another source added: “There’s no one else in Italy, and for that matter in the rest of Europe or Japan, who would be able to do the job.”
To sweeten the deal, Gemina is willing to part with its shining star, Fila, which posted worldwide sales of $840 million (1.4 trillion lire) in 1995.
Gemina’s offer fits nicely with Marzotto’s long-term strategy: to conquer a bigger piece of the high-end apparel market where, up to now, Marzotto hasn’t been a big player. In recent interviews, Marzotto executives have told WWD they are concentrating on pushing two new Gianfranco Ferre lines they manufacture under license, Gieffeffe and Studio by Ferre. Marzotto also manufactures Missoni men’s and women’s apparel and is one of Europe’s largest clothing and textile manufacturers, with 1995 sales of $1.41 billion (2.36 trillion lire), including Hugo Boss.
Over the last few months, the company has shaken up its clothing division, which accounts for 64 percent of turnover.
Pietro Marzotto’s first big step was to bring in Silvano Storer, the financial wunderkind who helped turn Benetton Sportsystem, the sports equipment company that owns Nordica and Prince, into a $900 million business.
Storer took over as general director of Marzotto’s apparel division in December and will also be overseeing Marzotto’s strategic development. Sources said that if the deal goes through, Storer will probably play a key role in reorganizing and overseeing all of the designer lines.
While there’s no question about Marzotto’s ability to manage an apparel business, some wonder how well the company’s industrial culture would mesh with the designers’ needs.
“I hope this plan doesn’t come true because I gave all of my trust to GFT, hoping it would regain the leadership it once had,” said Valentino ceo Giancarlo Giammetti. “For me, it would be a big disappointment, and I don’t know how I would react.” GFT makes Valentino Boutique women’s ready-to-wear and the Miss V diffusion line.
A Giorgio Armani spokesman said the house is following “any development at GFT with great interest,” but that it couldn’t comment on the Gemina-Marzotto plan.
“We don’t have any special information. As far as we know, this is still just a rumor,” the spokesman said. GFT manufactures Armani’s diffusion collections for men and women, which represent some 30 percent of GFT’s total business.