Total buyout: an annotated guidebook to mergermania

We are going to present, rather than a list, three prompts for reflection to spotlight and figure out the mergermania currently underway. From a new entry, which aims to upset overall balances by creating a new luxury group. To a tannery taking on this new challenge, once again, on the market. And someone, unexpectedly, keeps waiting and see

Considering how hectic the situation is at present, it would be rather pointless to try to make a list of all merger deals going on over the last few months (and weeks). If you want to know something more about the topic, you can find here a long and updated bunch of news by clicking on the following link. Please bear in mind that, by the time you read the news, lots of additional acquisitions might take place meanwhile, after our writing about them. In this continuing fusion of total buyout and going crazy merger, it is advisable to slow down and focus on a few key factors. We have pinpointed three of them.

1 – That is the way a new entry plays the game

Exor, a financial holding controlled by the Agnelli family, has been playing, for a few months, a new entry role in the fashion luxury business. While playing the game, they have successfully scored a couple of high-level goals.  But they also had to face, for the time being, a rather outstanding rejection. The game kicked off in December 2020: at that time, they paid 80 million euros to buy out the majority shares of Shang Xia, a made in China luxury fashion house formerly launched by Hermès (which is still one of the company’s shareholders).

In March 2021, they had a repeat performance: Exor invested 541 million euros to buy out 24% of Christian Louboutin fashion brand. Yet they missed the third goal, for the time being at least. In fact, at the beginning of July, Armani reportedly rejected the bid made by Exor, which was planning to take over Giorgio Armani’s fashion house and build up a new luxury major group centred on Ferrari. For the records, right this brand has turned into a business which goes a lot beyond car manufacturing: in June, they presented their first collection on the catwalk.

2 – The stone guest

It is quite easy to guess its identity: Kering. The luxury system has been waiting, for a few months, for its countermove after the deal of the century: the acquisition of Tiffany carried out by LVMH. Waiting in vain. The major group, led by the Pinault family, is still acting as a spectator observing the mergermania which has been recently going wild. Rumours are that they have reportedly made some attempts anyway: namely, Richemont, Ralph Lauren, Dolce & Gabbana. According to financial analysts, the French group are in the need for “one more Gucci”.

Nothing to do about it though, for the time being. Since Burberry have announced that Chief Executive Officer Marco Gobbetti is about to leave shortly, market players guess (again) that Kering might be planning to target right the British brand. As recently reported by Chinese web portal Ladymax, such buyout deal would require a slightly less than 8-billion-pound investment.

3 – Look up “leather” entry

Likewise, from 2020 to 2021, the leather tanning industry has been going through a lively flurry of activity (which is still alive) in terms of Mergers & Acquisitions. Let us give an impressively glaring example as evidence of that: Venetian tannery Pasubio, a leading company in the high-end automotive segment, controlled, since 2017, by CVC Capital Partners, an English private equity fund.

At the end of June, French PAI Partners bought out the business led by brothers Luca and Alberto Pretto: still we do not know how much they paid for it. Such expected deal is going to drive, for the tannery headquartered in the province of Vicenza, a new development round. Interestingly, PAI have made public the transfer of ownership just few hours after Pasubio themselves had announced, in turn, another buyout.

Specifically, the acquisition of German tannery Hewa Leather, which specializes in the manufacturing of leather for the premium luxury end, in the automotive and yachting industries. Their top clients are Rolls Royce, together with BMW and AUDI, for super-luxury and extra-sport cars. Such is the outlook: “To further consolidate our leadership in the top-rated end market of leather for car interiors”. Here is the merger-mania: enjoy it.

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