COULD JIL SANDER BE ON BERNARD ARNAULT’S RADAR SCREEN?

Byline: Samantha Conti / Miles Socha

PARIS — LVMH Moet Hennessy Louis Vuitton could turn into Jil Sander’s white knight.
Ten days after selling its 25.5 percent stake in Fendi to LVMH, Prada Group is said to heading for talks with the French luxury goods giant about the troubled German design company. Well-placed sources here say Prada chief Patrizio Bertelli is in preliminary discussions with LV Capital, the venture capital subsidiary of LVMH, about it taking over Sander. Rumors of a potential Prada-LVMH deal over Sander have been circulating in Europe for about a week. Even the Sander design studio in Hamburg has been buzzing with talk of a potential sale to LVMH.
Equally important, sources said, the sale would open the door to Sander returning to the company that bears her name. The designer left in February 2000 after acrimonious disputes with Bertelli over its direction. Her deal with Prada meant she could not design for another company until January 2003.
WWD first reported last month that Prada was shopping around its Jil Sander and Helmut Lang businesses in a bid to bolster its cash position.
“Prada and LV Capital are talking, but nothing has been finalized,” said one source.
However, Daniel Piette, president of LV Capital, denied discussions were taking place. “We are not investing in those kinds of businesses at all,” he said. “We have nothing to do with Jil Sander. I do not even know Mr. Bertelli.”
LV Capital, set up in 1998, is the entity behind a number of LVMH chairman Bernard Arnault’s investments. It holds stakes in Gant, Joseph, Thomas Pink and the auction house Phillips.
Sander could not immediately be reached for comment. She sold 75 percent of her nontraded shares in the company to Prada in August 1999 and the Italian firm also acquired 15 percent of the publicly traded shares. The deal cost Prada an estimated $105.6 million. In spring 2000, it bought a majority of the traded shares for about $20 million.
Sander continues to own 25 percent of the company’s nontraded shares. Her future intentions have been the subject of intense industry speculation for the last 22 months. Even a reconciliation with Bertelli was floated, although one never occurred.
Sander has remained mum on her plans, but sources close to her have said she is eager to win back creative control of her name. She reportedly has been visiting a number of companies recently to see if they would provide the financing for her to buy back the company from Prada.
Prada has struggled with Sander since it bought the firm. It first replaced her with a team of designers and then with Milan Vukmirovic. But while some retailers have said Sander’s sales are beginning to recover, longtime Sander stockists say the brand’s fans are deserting in droves.
Prada reported this spring that Sander had pre-tax profits of $9.9 million on sales of $119.4 million in the year 2000. Last month, Prada announced that it expects the German company to report a net loss, before taxes, of $5 million to $8 million in 2001 due to weak sales. It now expects Sander to have sales of about $126 million this year, about $9 million less than originally forecast.
The Italian company bought Sander during a three-year acquisition binge that included Helmut Lang, Church & Co., Genny, Byblos, Carshoe and Azzedine Alaia. In 1999, Prada and LVMH teamed up to buy a joint 51 percent stake in Fendi in one of the most dramatic bidding wars the industry had ever seen.
But Prada’s strategy has begun to unravel recently. It put its plans for an IPO on ice earlier this year because of a sharp downturn in the economy and continues to struggle with debt of $1.16 billion. Prada is planning a $616 million bond issue this month to help offset the debt burden. As reported, Prada sold its 25.5 percent stake in Fendi to LVMH for about $260 million payable over four years.

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