DELLA VALLE CONFIRMS PLANS TO GO PUBLIC

Byline: Samantha Conti

MILAN — Diego Della Valle, owner of the Tod’s and Hogan accessories brands, is turning to the stock market with an initial public offering set for later this year, confirming a report in these columns Sept. 21.
Late last week Della Valle issued a brief statement saying he was planning a listing on the Milan Bourse, and that his company’s board of directors had approved the move on Aug. 5. It was unclear, however, what percentage of Della Valle’s holding company, Ema Srl, would be listed. Sources speculated that he was planning to float a minority stake — possibly about 30 percent — of the company.
Well-placed sources told WWD that Della Valle might also be preparing for a Wall Street listing, although Della Valle declined to comment.
Della Valle, whose first big hit was the Tod’s pebble-sole car shoe, had been talking about a public listing for years, telling WWD in 1998: “My company is structured in such a way that we are prepared to go public at any time.” In the past, Della Valle has also made clear his reasons for turning to financial markets: He wants to make acquisitions and build his retail network.
Della Valle’s decision comes at a time when increasing numbers of Italian companies are opting for the stock market.
Gruppo Mariella Burani, which owns the Burani and Mila Schon brands, went public last July, while Aeffe, the group that controls Alberta Ferretti, Moschino and Rifat Ozbek, announced its plans to seek a listing over the next two to three years. Prada chief Patrizio Bertelli, too, has mentioned his interest in an IPO for the Prada Group “after 2002 or 2003.”
“Going public is the most logical decision for Della Valle and the route that many companies will increasingly take,” said Carlo Pambianco, a luxury goods consultant here. He said Della Valle’s company would increasingly need financial strength to invest in communication and directly operated stores.
Merrill Lynch and the Italian bank Unicredito are sponsoring the listing. While neither bank would comment on the value of Della Valle’s group, banking insiders said the price could be anywhere between $1.1 billion and $1.3 billion.
“The banks view Della Valle’s group as a luxury company, and the current average multiple for the luxury sector is 16-19 times EBITDA (earnings before interest, taxes, debt and amortization),” said one banker, who asked not to be named. “Della Valle’s company also has sustained annual growth.”
Last October, the sale of Fendi to the new joint venture company formed by LVMH Moet Hennessy Louis Vuitton and Prada Group sent luxury goods multiples spiralling out of control. The LVMH-Prada team paid an estimated 33 times net profit — one of the highest multiples the industry had ever seen. A month before, Bertelli knocked Della Valle out of the running for the English shoemaker Church & Co., paying nearly 27 times the company’s 1998 net profits — in cash.
Insiders here said Della Valle’s company should appeal to investors because it is so pure and highly focused.
Della Valle’s 1999 group sales were $196 million, a 5 percent rise over the year before. This year, Della Valle said the figure will rise 16 percent to $227.3 million, with net profits equal to approximately 10 percent of sales. The company also has a cash pile of about $10 million. All figures are calculated at current exchange.
Della Valle has just put the finishing touches on a new, $46 million headquarters in Italy’s Marches region, on the Adriatic coast, and currently employs about 1,400 workers, most of them shoemakers.
His choice to go public is the latest in a string of savvy moves aimed at transforming the small shoe company founded by his grandfather into a luxury group. In addition to the Tod’s, Hogans, and Fay brands, Della Valle is a joint-owner of Web eyewear and the Acqua di Parma fragrance business.
As a teenager, he dreamed of transforming the family business — which by the time he reached his teens was a prosperous company making private label collections for Saks Fifth Avenue and Neiman Marcus — into a name the public would recognize.

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