By Claudia Cristoferi
MILAN (Reuters) -Shares in Tod’s hit a 16-month high on Friday on expectations LVMH could help revive the struggling Italian brand and take it over after the French luxury giant’s decision to increase its stake in Tod’s .
Long seen as a recovery target, Tod’s has struggled with declining sales over the past five years and the pandemic has further hampered efforts to relaunch a brand that rose to fame in the 1990s for its gommino moccasins, but who is struggling to attract younger buyers.
Tod’s said Thursday evening that LVMH would buy a 6.8% stake for 74.5 million euros ($ 89 million) from founder and chairman Diego Della Valle, adding a 3.2% stake the group owns. since listing on the Tod’s stock exchange in 2000.
Della Valle, who has been director of LVMH for the past two decades, said the strengthened partnership could be “an excellent reason to consider new opportunities to be seized in the future”.
Tod’s shares rose 16%, before falling to trade 8% to 38.16 euros at 0802 GMT, their highest since early 2020.
They have rallied 23% in the past two weeks after Tod’s named Instagram star and fashion influencer Chiara Ferragni to its board on April 9, signaling new impetus to rejuvenate the group’s image.
Tod’s said LVMH – led by French billionaire Bernard Arnault – would pay 33.1 euros per share for the stake, slightly below the closing share price on Thursday of 35.3 euros.
It is well below the 40-45 euros for a share that Della Valle has paid for in the past two years by increasing its stake in the group by 9%, fueling speculation that it could privatize it.
“With the Della Valle family having increased their stake in late 2019 at a much higher price, this transaction – albeit not material – suggests that they recognize that the turnaround plan has not worked and the need to bring in more in-house expertise, ”Citi analysts said in a note.
With a float of just € 300 million, Citi said LVMH could help Della Vale remove Tod’s from the list to facilitate a restructuring.
Sources familiar with the matter called the move “friendly support” for Della Valle, a source saying the French luxury giant is not expected to increase its participation at this time.
Bestinver analysts have said, however, that LVMH may be interested in adding Tod’s to its portfolio, which already includes Italian luxury brands Bulgari, Fendi and Loro Piana.
The French group, often seen as a predator, has just concluded a $ 15.8 billion buyout of US jeweler Tiffany and has said it is focused on absorbing the purchase for now.
Milan-based broker Equita has also reported a possible sale in the future, although Della Valle has repeatedly denied plans to sell.
The deal with LVMH, which has a market value of 319 billion euros against 1.2 billion Tod’s, reduces the Della Valle family’s stake in Tod’s to around 64%, even though a system of loyalty shares means that they control 74% of the voting rights.
(1 USD = 0.8296 euros)
(Writing by Valentina Za; Editing by Emelia Sithole-Matarise)