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LVMH has signed a deal with Moncler’s chief executive to acquire up to a 22% stake in an investment vehicle that controls the Italian luxury outerwear retailer.
Bernard Arnault’s group has bought a 10% stake in Double R, where Moncler chairman and chief executive Remo Ruffini holds 15.8% of the business through a special purpose vehicle. The company has the option to increase its stake up to 22%.
Under the terms of the agreement, Double R will use LVMH’s funds to increase its stake in Moncler to up to 18.5% over the next 18 months, strengthening Double R’s position as its largest shareholder.
Mr. Ruffini will continue to control Double R, but under the agreement LVMH will be able to appoint two members of the board of directors plus one person to Moncler.
LVMH said in a statement that Ruffini will remain Moncler’s chairman and chief executive officer and “continue to define and drive the Moncler Group’s future development plans.” LVMH will continue to be a “long-term, stable minority shareholder of Double R and will support Ruffini in developing his vision for the future,” he added.
“This partnership strengthens Double R’s position at Moncler and provides the stability needed to realize my vision for the future,” Ruffini said in a statement.
“Moncler has been one of the industry’s most important entrepreneurial success stories over the past 20 years. Remo Ruffini’s vision and leadership have been outstanding, and we are pleased to join his holding company to strengthen our position as its largest shareholder. We are pleased to be able to invest,” said Arnault.
The deal would give LVMH an estimated 1.6% stake in Moncler, which could rise as much as 4%, according to Barclays analysts.
Moncler’s shares rose more than 10% on Friday morning, giving it a market capitalization of 15.75 billion euros. LVMH rose 2.8%, building on gains earlier this week as investors surfed on optimism that China’s new economic stimulus package could reverse declines in the country’s luxury sales. This was an increase of over 18%.
Moncler, which also owns men’s outdoor clothing brand Stone Island, has been one of the best performing companies as the pandemic-era luxury goods boom slows. Underlying sales for the first half of this year rose by 11% to 1.23 billion euros.
Analysts at Barclays estimate that the company has maintained its growth in China even as the economic downturn has caused sales at many luxury goods groups, including LVMH, to decline.
Moncler’s shareholder structure has been in flux since earlier this year, when Stone Island’s former owners, the Rivetti family, sold an approximately 16.5 percent stake in Double R, reducing their vehicle ownership in Moncler to its current 5.8 percent. It has become.
“LVMH’s entry is . . . an answer to strengthen the Ruffini family’s bet on Double R (and) against Moncler,” wrote Barclays’ Carol Majo.
This is not the first time that LVMH, the world’s largest luxury goods group with a market value of 348 billion euros, has acquired a minority stake in an Italian company in the industry.
Tod’s CEO Diego Della Valle has signed a deal with LVMH to acquire a minority stake in the company in 2021. Tod’s was delisted from the Milan stock exchange this year following a deal with LVMH-backed private equity firm L. Catterton.
LVMH owns more than 75 brands, including Louis Vuitton and Dior.