ARMANI EXPLAINS BID FOR CONTROL OF SIMINT
Byline: Sara Gay Forden
MILAN — The house of Giorgio Armani was scrambling Friday to explain terms of a deal to boost its stake in Modena-based jeans and sportswear manufacturer Simint SpA to at least 52 percent from 36 percent, after stock market regulator Consob suspended trading on the shares Friday to head off a selling storm.
News of the preliminary agreement to buy an additional 16.88 percent of Simint from Finar Srl, a holding company of the Singapore-based Ong Beng Seng group that also bought Simint’s U.S. operations two years ago, was issued late Thursday. The deal included a “sweetheart” price for Armani of 1,600 lire ($1) per share, a 43 percent discount off Thursday’s stock market high of 2,806 lire ($1.70). The total value of the transaction has been placed at 12.5 billion lire ($8 million).
Simint manufactures the Armani jeans collection and does cutting and sewing for part of the Emporio Armani collection.
News of the pending transaction with Finar set off a selling storm in Simint stock on the Milan market, due to the discrepancy between Armani and Finar’s negotiated price and the stock market price. The price of Simint shares has been climbing steadily over the past few weeks, as the company is undergoing a successful reorganization and earnings are improving.
As required by Italy’s stock market laws on public tender offers, Armani will now be obliged to make a comparable offer to buy an equivalent stake from other Simint investors.
“Either the market will believe in Simint and disregard the terms of the agreement between Armani and Finar or the stock price is going to plunge to 1,600 lire from where it has been trading,” said one stock market analyst.
The situation has put Simint managing director Maurizio Cacciatore, who has been masterminding Simint’s return to profitability, into a bit of a pickle.
“The only thing I can do is reiterate that the company is healthy and doing well,” said Cacciatore in a telephone interview.
In a statement issued by Armani late Friday, the design house explained that Armani agreed to buy Finar’s Simint shares because the Ong group has gradually diversified its business in designer labels to include agreements with other top designers, such as Donna Karan, who are competitors.
“Ong and Armani agreed on Ong’s exit from Simint so as not to create a potential conflict of interest,” Armani said in the statement, which added that the commercial relationship between the two companies will continue. The Ong group, under its subsidiary Club 21, operates the A/X Armani Jeans business in the U.S. and distributes the Armani Jeans line in the UK.