MILAN — Pinault-Printemps-Redoute said it has control of 99.39 percent of Gucci and is starting a court-mandated buyout procedure to get 100 percent of the Italian fashion house.
As of April 30, PPR held 99.23 percent of Gucci following the original month-long tender offer at a price of $85.52 per share. Dutch law forced PPR to extend the offer through May 20. During that secondary period, PPR snapped up another 1.13 million Gucci shares, or 1.09 percent of the firm, lifting its stake. on an adjusted basis, to 99.39 percent.
As noted, completion of the deal will result in PPR paying a total of $9 billion for all of Gucci’s shares.
PPR noted it had to make some adjustments to calculate the final 99.39 figure. In some cases, PPR said it never received shares it was expecting in initial tabulations. Also, as reported, Italian stock market regulator Consob blocked the PPR offer in Italy for technical reasons — one of which was that PPR didn’t offer documentation in Italian.
PPR said it will now begin a compulsory buyout procedure. It will seek a court order forcing all remaining shareholders to tender their shares to PPR. This squeeze-out will also apply to any shareholders living in Italy, PPR said.
On April 30, the New York Stock Exchange suspended Gucci shares from trading.
Gucci is expected to become a wholly owned subsidiary of PPR. At the beginning of the offer, financial markets considered a Gucci delisting to be a fait accompli, given that PPR would assume full management control and that Gucci’s supervisory board and two major banks deemed the offer fair and advised minority shareholders to accept it.
Gucci’s independent directors — Adrian Bellamy, Aureliano Benedetti, Reto Domeniconi and Karel Vuursteen — resigned from the supervisory board on May 12 following completion of the first phase of the offer. Serge Weinberg, PPR chief executive, who also resigned from the board, became Gucci’s interim president, pending the arrival of Robert Polet on July 1, Gucci said.
Meanwhile, investment bank Goldman Sachs last week downgraded its stock rating on PPR from “neutral” to “underperform,” saying the group’s current stock value fails to account for doubts raised by Ford and De Sole’s departures.
“In our view, [recent Gucci] departures could potentially pose a challenge to management continuity and transition, which could make it more difficult for the new creative team to operate efficiently within an organization that would need to redefine some of its key management roles,” wrote analyst Richard Chamberlain and Jacques-Franck Dossin in the Goldman’s report.
The bank also said PPR’s electrical components subsidiary, Rexel, which PPR has said it wants to sell by year-end, presents an additional burden on the share price.
“We believe there remains a risk that PPR cannot find a buyer [for Rexel],” Goldman Sachs said.
— With contributions from Robert Murphy, Paris