Moncler Denies Reports of M&A Talks With Kering as Shares Soar
By Cristina Roca
Moncler SpA's (MOV.MI) main shareholder and chief executive Remo
Ruffini on Thursday threw cold water on reports that the company
has held exploratory talks with French luxury-goods conglomerate
Kering (KER.FR) over a possible deal.
Mr. Ruffini said he is in contact with sector players, including
Kering, to explore potential opportunities. "At the moment,
however, there is not any concrete hypothesis under consideration,"
Mr. Ruffini said, referring to a Bloomberg report late on Wednesday
that said the Italian company, known for its luxury puffer jackets,
has held early-stage discussions with Kering.
The report got luxury investors buzzing about the possibility of
another big M&A deal after LVMH Moet Hennessy Louis Vuitton SE
(MC.FR) scooped up Tiffany & Co. (TIF) last month in a mammoth
$16.2 billion deal.
At 1315 GMT, shares in Moncler traded 8.2% higher at EUR42.00
($46.53), while the news also buoyed shares of smaller Italian
luxury-goods companies seen by investors as potential M&A
targets. Shares in Salvatore Ferragamo SpA (SFER.MI) traded 6.7%
higher, and Tod's SpA (TOD.MI) stock was up by 5.1%. Both Italian
heritage shoe brands that have struggled to keep up with larger
players in recent years.
LVMH's recent Tiffany megadeal has put pressure on other big
sector players like Kering to join the M&A dance, Bernstein
analyst Luca Solca said.
Kering has had a great run in the past few years. Shares in the
luxury group now trade three times higher than four years ago,
buoyed by the huge success of Gucci, the main brand in its
portfolio. But recently its overreliance on the brand, which brings
in 83% of the group's total earnings before interest and tax,
according to Equita SIM's estimates, is making investors
Kering needs M&A to move to the next level, and Moncler
could help it balance its portfolio, becoming the group's
second-biggest brand by value, Jefferies analyst Flavio Cereda
Moncler's best-in-sector margins and leading position in its
market niche are attractive, Equita SIM analyst Paola Carboni
The company has gone from a small skiwear maker into a runaway
success story in luxury under the helm of chief executive Remo
Ruffini. He bought a stake in Moncler in 2003 and took the brand
upmarket, creating buzz through collaborations with famous
designers like Valentino Fashion Group SpA's Pierpaolo
The brand has been enjoying steady double-digit organic sales
growth for the past few years, and analysts expect it continue,
with a consensus estimate provided by FactSet forecasting 13%
organic sales growth for 2019.
However, Bernstein's Luca Solca believes Moncler isn't the
perfect target for Kering: Firstly, Moncler does nothing to enhance
Kering's hard-luxury credentials at a time when competition in the
jewelry category seems to be heating up following the LVMH-Tiffany
Secondly, Ruffini's management team has already done a very good
job with the brand, meaning it will be harder for Kering to add
value--especially if it has to pay a hefty premium to get its hands
on the brand, the analyst said.
With shares in Moncler now worth 48% more than at the beginning
of this year and a EUR10.89 billion market valuation, any deal to
snap it up would be considerable in size. Ms. Carboni believes
Moncler could fetch EUR50 euros a share, representing a 30%
premium. This would bring the company's valuation close to EUR13
And given the brand's bright outlook, the French owner of Gucci
shouldn't expect to get any discounts. "Ruffini is in no hurry to
sell," according to Mr. Solca.
"It is not a cheap deal," Mr. Cereda said.
Kering declined to comment when contacted by Dow Jones
Write to Cristina Roca at firstname.lastname@example.org;
(END) Dow Jones Newswires
December 05, 2019 08:53 ET (13:53 GMT)
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