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Italian luxury bag and shoemaker Tod’s is to go private in a deal with LVMH-backed private equity firm L Catterton, ending more than two decades as a public company on the Milan stock exchange.
Following the transaction, which was announced late on Saturday, L Catterton will have a 36 per cent stake in Tod’s while the Della Valle family, which currently controls the group, will retain its majority ownership with 54 per cent of the shares.
L Catterton — which was created in 2016 through a partnership between a private equity firm, French luxury group LVMH and founder Bernard Arnault’s family investment vehicle — will pay €43 per share for its stake for a total of €512mn, a 18 per cent premium on the closing value of Tod’s shares on Friday. The deal values Tod’s at around €1.4bn excluding debt.
LVMH will retain its 10 per cent stake in Tod’s after the transaction.
L Catterton said in a statement that the “delisting is a precondition to ensure the pursuit of the [Tod’s] future growth programs [sic] and consolidation . . . [with] greater management and organisational flexibility, faster decision-making and execution times”.
The private equity firm — which also has investments in fashion brands APC and Etro and high-end gym chain Equinox — listed German orthopaedic shoe company turned fashion favourite Birkenstock in New York in October in one of the year’s biggest IPOs.
Tod’s founding family first announced plans to delist in August 2022 as part of ambitions to turn the company around. Earnings at the group have been under pressure for much of the past decade as the popularity of its brands, which include its namesake Tod’s as well as Roger Vivier, Fay and Hogan, waned. However, the plan was scrapped after the Della Valle family failed to reach the ownership threshold they needed to take it private.
At the time, the family said it would be “more difficult” to achieve its long-term objectives as a public company “given the limitations” of listing requirements, which include publishing earnings updates.
Tod’s performance improved last year with the group announcing in January that sales increased 11.9 per cent in 2023 to €1.13bn, with all brands gaining in the double digits.
The company’s shares have gained 18 per cent in the weeks since its stronger results were announced for a market value of €1.16bn, but remain below the takeover price offered by the Della Valle’s last year “despite clear improvements in Tod’s brand desirability and earnings momentum,” wrote Thomas Chauvet, analyst at Citi, in a note last month.
“[This] highlights the difficulty for small luxury businesses to execute turnarounds under the scrutiny of public markets,” he added.