Etro Open to Partnerships, L Catterton Said to Be Eyeing Brand

MILAN — As the Italian fashion industry continues to see brisk M&A activity, sources told WWD on Monday that Etro has tapped Rothschild as its adviser.

Multiple sources said private equity fund L Catterton has expressed interest in acquiring a stake in the family-owned company.

While a market source said it was true that L Catterton has approached the Etro family, which owns the brand, “a potential deal is still in its infancy, L Catterton is still kicking the tires.”

Another source believes things are somewhat more advanced, saying L Catterton has been looking at the brand for a couple of months.

There clearly is a new development. While the Etro family has long denied any intention of selling the company, asked to comment on the speculation on Monday, the response was that “the group is focused on creating the conditions for the future growth of the business. In this context, the group is also evaluating possible partnerships aimed at facilitating said process. As of today, there are no binding agreements with any group or investment fund.”

L Catterton had no comment on the speculation.

According to another source who requested anonymity, Etro’s real estate properties and web of directly owned stores could slow the negotiations and even be a stumbling block in the deal. Overall, there are about 200 Etro stores around the world.

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WWD reported in March 2019 that sources said investors were looking at the fashion brand, which in 2018 celebrated its 50th anniversary with an exhibition in Milan named “Generation Paisley,” a reference to the company’s most recognizable pattern.

Gerolamo Etro, known as Gimmo, founded the company in 1968 as a textile firm and, with a forward-thinking initiative, decided to invest in ready-to-wear and lifestyle in the ’80s, expanding into collections that ranged from perfumes to suitcases. The exhibit was conceived and put together by the family, which includes siblings Veronica, creative director for the women’s collections; Kean, men’s creative director; Ippolito, who oversees strategic management, and Jacopo, who is in charge of the home line. Francesco Freschi holds the role of general manager.

Two years ago, sources said Qatar-based Mayhoola, which also counts Valentino, Balmain and the Italian men’s label Pal Zileri among its investments, had been eyeing Etro with particular interest. However, a deal never materialized, and sources told WWD that the family members had different views on the sale.

Valentino’s former chief executive officer Stefano Sassi has been quietly consulting for Etro for several months now, but, according to sources, there are no talks taking place between Mayhoola and Etro. Sassi could, however, be an added asset in the negotiations with L Catterton. The executive joined Valentino in 2006 and was instrumental in leading and growing the company through the acquisition in 2012 by Mayhoola.

As per the most recent figures available, Etro sales totaled 285 million euros in 2018. The company’s debt is said to amount to around 50 million euros, according to a source.

Italy’s daily Il Sole 24 Ore first reported on L Catterton’s interest for Etro.

Last month, L Catterton sold the Italian Dondup brand to the Made in Italy Fund. Stakes in Dondup were acquired by the European arm of L Capital in 2009 and then by L Capital Asia in 2015. L Capital is now part of L Catterton.

In March, L Catterton and family holding Financière Agache, investment vehicles backed by LVMH Moët Hennessy Louis Vuitton and luxury titan Bernard Arnault and his family respectively, acquired a majority stake in Birkenstock, with plans to expand in Asia, open more stores and ramp up e-commerce.

L Catterton is a partnership between the original U.S. investment firm Catterton and Arnault’s LVMH and Groupe Arnault, formed in 2016. It describes itself as “the largest, diversified consumer-dedicated private equity firm in the world” and has more than $22 billion under management, with stakes in a wide variety of firms, including Everlane, Ba&sh, Intercos Group, Sweaty Betty and more. L Catterton recently snapped up Jott, a French outerwear firm known for its lightweight puffers.

Partly because of the impact of the COVID-19 pandemic, partly because of an organic generational shift, and partly responding to an increasing need for companies to build mass and power, there has been a recent increase in M&A deals in Italy. On Monday, OTB said it had finalized the closing of the Jil Sander acquisition, revealed last month. Renzo Rosso’s group now controls 100 percent of the brand, previously owned by the Japanese Onward Holding. OTB includes the Diesel, Maison Margiela, Marni, Viktor & Rolf brands and manufacturing companies Staff International and Brave Kid, in addition to a minority stake in American label Amiri.

Following Moncler’s takeover of Stone Island last December, spearheaded by chairman and CEO Remo Ruffini, other deals have recently included the Agnelli family’s holding Exor acquiring a majority stake in Shang Xia; Style Capital taking over Zimmermann; GCDS selling a majority stake to the Made in Italy Fund, and Italian retailer Claudio Antonioli buying Ann Demeulemeester.

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