Byline: Samantha Conti

MILAN — Tod’s SpA is set to announce its final share price later this week, and it looks as if it will be on the bottom end of the scale established by the company’s two sponsors, UniCredit Banca Mobiliare SpA and Merrill Lynch International.
As reported, Diego Della Valle is seeking an initial public offering on the Italian bourse for his accessories company Tod’s in the hopes of raising money to expand and diversify his business.
But it appears that investors will be taking a cautious approach to Tod’s. While the Tod’s prospectus, released on Oct. 18, had originally talked about a share price range of between $38 and $50, it now appears the shares will be sold within a lower range of between $30 and $39. All figures are translated from the euro at current exchange.
The final share price will be made public this Thursday while trading is set to begin four days later.
While both UBM and Merrill Lynch declined to comment on the price discrepancy, sources close to both banks said the second set of prices represented a discount for first-time investors — a discount that wasn’t mentioned in the public prospectus.
“There was a misunderstanding,” said one source. “The prices included in the prospectus were correct, but pre-discount,” said one source. “The maximum price for the share is indeed 46 euros (about $39). The banks failed to make that clear.”
Andrea Paladini, an equities analyst with Centrosim in Milan, said while he believes Tod’s SpA to be “an interesting company,” he would prefer to see a price even lower than the current low figure of $30.
“Tod’s must leave room for the stock to grow in value, so I think it would be safer to go lower. You have to keep in mind that 80 percent of Tod’s sales come from footwear, and the concentration in one sector means Tod’s is more vulnerable to shifts in the market.” The average price for luxury stocks — including Gucci, Bulgari, LVMH Moet Hennessy Louis Vuitton and Hermes — is approximately $32 a share. Without Bulgari, which is considered by most analysts to be the sector’s benchmark stock, the average price is about $30.
Della Valle plans to list some 7,562,500 shares, or 25 percent of Tod’s, on the Italian bourse. Another 687,500 shares — or 2.27 percent of the company — may eventually be listed in the event that the original offering is over-subscribed. The Della Valle family will control the remaining 75 percent stake through a holding company, of which Diego is the majority shareholder with 59.5 percent of shares.
The bulk of Tod’s shares up for sale have been reserved for institutional investors. Centrosim’s Paladini added that Tod’s may also fall victim to a future slowdown in the growth rate of luxury stocks. “Over the past two years growth has been vigorous in the sector, but my feeling is that over the next few months growth may be more limited,” he said.

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