Tod’s owners launch $344 million bid to take it private

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  • The Della Valle family launches an offer at 40 euros/shr
  • Auction offers 20% premium to Tuesday’s closing price
  • Offer valuing the company at 1.32 billion euros

MILAN, Aug 3 (Reuters) – The founding family and biggest shareholder of Italy’s Tod’s (TOD.MI) said it would spend up to 338 million euros ($344 million) to buy out other investors of the luxury goods brand and privatize it, aiming to stimulate its renaissance.

The Della Valle brothers said in a statement that their holding company would pay 40 euros for each Tod’s share, a 20.4% premium to the share’s closing price on Tuesday, valuing the company at 1.32 billion euros .

The offer is equal to the price set by the company when it went public in 2000.

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Like other Italian brands that have built their fortunes on craftsmanship, Tod’s has struggled to appeal to young luxury shoppers in recent years.

Famous for its Gommino loafers, Tod’s launched a strategy to revamp its brands in late 2017, but the coronavirus pandemic hampered its efforts.

Group sales rebounded nearly 40% last year, up after five consecutive years of decline.

“The objective is to enhance the individual brands of the group, giving them strong individual visibility and operational autonomy,” they said in the press release.

Tod’s was born from a shoemaking workshop created at the beginning of the last century by the grandfather of the Della Valle brothers. Its brands also include Roger Vivier, Hogan and Fay.

“Through this strategy, we intend to strengthen the positioning of brands at the top of the quality and luxury market, with a high level of desirability”, adds the press release, specifying that not being listed would allow the company to focus on growth without being judged on short-term results.

THE ROLE OF LVMH

The Della Valle brothers, who directly and indirectly hold a 64.45% stake in Tod’s, will launch the bid for an additional 25.55% of the company’s shares through their joint holding company DeVa Finance Srl

The remaining 10% is held by Delphine SAS, which is part of the LVMH group (LVMH.PA).

Delphine has reached an agreement with the brothers, under the terms of which she will not contribute her stake and will remain a shareholder of the discounted group with the same stake.

The company’s shares were trading up 21.6% at 0723 GMT at 40.6 euros, slightly above the offer price.

From highs of 145 euros reached in 2013, shares of the luxury group have underperformed their peers in recent years.

Through Tuesday’s closing price, the stock was down 32% year-to-date, compared to French luxury conglomerate LVMH and Salvatore Ferragamo (SFER.MI), another Italian luxury brand in difficulty, down 7% and 25%, respectively.

BNP Paribas, Crédit Agricole Corporate Investment Bank and Deutsche Bank are acting as financial advisers and are also financing the offer, while BonelliErede is legal consultant.

($1 = 0.9825 euros)

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Reporting by Agnieszka Flak; graphic by Stefano Bernabei, editing by Jason Neely and Keith Weir

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