PPR Is Not Interested In Prada - Source
June 07 2011 - 6:06AM
Dow Jones News
PPR SA (PP.FR) is not interested in buying luxury company Prada
S.p.A., a person familiar with the matter told Dow Jones Newswires
Tuesday.
The French business daily La Tribune in its Tuesday edition said
PPR was considering a large acquisition in the luxury sector
according to a source in the company, citing Prada, as well as Hugo
Boss (BOS.XE) and Burberry PLC (BRBY.LN) as likely targets.
A recent rebound in luxury consumption, as well as LVMH Moet
Hennessy Louis Vuitton SA's (MC.FR) current EUR4.3 billion
acquisition of Italian jeweler Bulgari (BUL.MI), has sparked
interest in the sector.
PPR Chief Executive Francois-Henri Pinault said at the company's
annual shareholder meeting last month that he is interested in
making an acquisition in the luxury sector, but stressed that he
would be targeting medium or modest-sized companies with potential
for international growth.
In describing the kinds of luxury companies PPR might target,
Pinault mentioned brands the company already owns, like Balenciaga,
Yves Saint Laurent or Bottega Veneta. He said Bottega Veneta's
annual sales were around EUR35 million when it bought the company
in 2001, but last year increased to over EUR500 million.
Brands with a "certain degree of maturity" are less attractive
than "a smaller brand we feel has high potential," Pinault said at
the time.
That would rule out British luxury company Burberry, which has a
market capitalization of around GBP5.77 billion. Hugo Boss is also
an unlikely target as it is majority-owned by private equity firm
Permira who told German daily Suddeutsche Zeitung it wasn't in a
hurry to sell its stake in the fashion house, and plans to push the
brand's growth in the U.S.
Prada is set to be the first Italian company to list in Hong
Kong, and is planning to raise up to $2.6 billion in an initial
public offering ahead of listing on June 24, according to a person
familiar with the matter.
PPR is shedding its retail assets and seeking to bulk up its
portfolio of luxury brands and sports brands around its key luxury
label Gucci and sportswear brand Puma (PUM.XE). PPR recently
launched an offer for the U.S.-based skate and surf apparel group
Volcom Inc. (VLCM), in a deal worth $608 million.
Analysts at Citigroup estimated PPR's potential cash for
acquisitions at between EUR1 billion and EUR5 billion once the
company sells its remaining retails assets - the electronics
retailers Fnac, catalogue business Redcats, and a stake in the
African distributer CFAO (CFAO.FR). PPR has said however that it is
not in a hurry to sell the remaining retail assets and will take
the time to do so at the right price.
As for further potential acquisitions in sport and lifestyle
brands, finding potential acquisition targets is more complicated,
Pinault said. "The question is what brands have true legitimacy,"
given the enormous number competing in that sector," he said.
At 0914 GMT, PPR shares traded down 0.3% or EUR0.35 to
EUR117.05, underperforming the Paris CAC-40, up 0.5%.
-By Mimosa Spencer, Dow Jones Newswires; +33 1 40 17 17 73;
mimosa.spencer@dowjones.com
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