By Manuela Mesco
MILAN--Private-equity firm Blackstone Group LP is nearing deal
to buy a minority stake in Italian fashion house Gianni Versace
SpA, a person familiar with the situation said Wednesday, in what
would mark a major milestone in the turnaround of a fashion house
that was once on the brink of bankruptcy.
After months of negotiations, the Versace family--which controls
the company founded in the 1970s by Gianni Versace--is near a
decision to sell a 20% stake in the company to the investment fund
for as much as EUR200 million ($275 million). Another person close
to the negotiations cautioned that Versace and Blackstone hadn't
yet reached a deal and that the situation remained fluid.
Blackstone had been shortlisted together with Investcorp and
CCMP Capital to buy a stake in the company and they all presented
their bids last week. According to one of the people, a deal with
Blackstone would value Versace at about EUR1.1 billion, more than
any of the other suitors offered.
The news was first reported by the Financial Times.
The Versace family laid down strict conditions for any buyer. A
minority partner would have to support the creative strategy laid
down by Donatella Versace and comply with the strategic direction
pursued by Chief Executive Gian Giacomo Ferraris, who has helped
bring Versace back to health over the last several years. Ms.
Versace, the younger sister of Gianni, who was shot dead in 1997,
presented a well-received women's wear collection at Milan's
fashion week last Friday.
The family, who hired Goldman Sachs Group Inc. and Banca IMI to
run the auction, should make their decision official in a couple of
weeks, another person previously said.
If the family finalizes the deal, it would be a major
vindication for a maison that helped define Italian fashion under
the guidance of Gianni Versace, whose sexy styles have been worn by
celebrities such as Princess Diana, Jennifer Lopez and Angelina
Jolie. After Mr. Versace died in 1997, however, the house neared
bankruptcy in 2004, when Italian banks forced new management on the
company.
Under the helm of Mr. Ferraris, who became chief executive in
2009, the house has regained ground, with sales rising more than
50% between 2009 and 2012.
Its newfound success encouraged the controlling family--which
consists of Donatella Versace, her daughter Allegra and her brother
Santo--to consider selling a minority stake. Versace remains a
minnow compared with powerhouses such as Prada and LVMH Moët
Hennessy Louis Vuitton, and needs the fresh capital to grow,
particularly in the emerging markets. Versace had sales of little
more than EUR400 million in 2012--the latest full-year figures
available--leaving it just an eighth the size of the Prada Group
and a quarter the size of Giorgio Armani SpA. Opening new stores in
the top shopping streets can cost tens of millions of dollars
each.
The Versace auction has drawn strong interest at a time when
Italian luxury labels have been a big draw in recent years, with
several companies snapped up because of their strong brand names.
LVMH and Kering have bought Bulgari, Loro Piana and Pomellato in
the last several years. Others have gone public, attracting strong
investor interest; for instance, luxury jacket maker Moncler saw
its initial public offering more than 30 times subscribed and its
shares soared nearly 50% on its first day of trading in Milan in
December. According to a person familiar with the situation, the
stellar performance of luxury IPOs in recent months helped double
the price under discussion in the Versace auction.
According to people familiar with the company's future plans,
Versace could eventually consider a stock market listing. No firm
decision has been taken so far.
Other funds that had previously expressed interest were
U.K.-based Permira, Italian private-equity fund Clessidra, Italian
fund FSI, Qatar Holding and French buyout firm Ardian, previously
known as AXA. But they didn't make it into the final shortlist,
according to one of the people.
Mike Spector contributed to this article
Write to Manuela Mesco at manuela.mesco@wsj.com
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