Ferrari & Armani: A luxury group in the making ?

Ferrari Armani

John Elkann, heir to the Agnelli industrial dynasty, investigated the possibility of a tie-up with fashion designer Giorgio Armani as part of a plan to create a luxury conglomerate around Ferrari, five sources told Reuters familiar with the file.

Elkann, who is also chairman of automaker Stellantis, offered to take a minority stake in the Milan fashion house run by 87-year-old Giorgio Armani, but his latest proposal was rejected earlier this month, two sources said, on condition of anonymity.

The operation would have made Agnellis major players in the fashion sector, like the Arnault and Pinault families in France.

Talks with Armani, valued by analysts at around 6 billion euros ($ 7.09 billion), have not progressed due to the couturier’s reluctance to sell a stake, two sources said, adding that the discussions had been informal and the companies had not called on any bank.

A spokesperson for Exor, the holding company for the Elkann and Agnelli families, told Reuters: “Exor has not approached (Armani) and made no proposal.”

Armani declined to comment on this information.

A possible tie-up with Armani was reportedly made through investment firm Exor or carmaker Ferrari, controlled by Exor, but Elkann’s latest offer was rejected, the sources said.

“Discussions are over for now,” said one of the sources.

This initiative reflects the efforts of the founders of Fiat Chrysler, who own 53% of Exor, to strengthen their exposure to the luxury market.

Exor took a 24% stake in Christian Louboutin in March, as part of a transaction that valued the luxury shoe brand, famous for their red soles, to 2.25 billion euros.

In 2020, the company became the first shareholder of Shang Xia, a luxury brand co-founded by Hermès.

“If there is anyone who could create a serious competitor to the French conglomerates, it is Elkann,” said a banker familiar with the matter.

“He has the money, the credibility and the family prestige to do it.”

OPEN EYES

Speculation over succession plans for the fashion house founded in 1975 by Armani, known as King Giorgio, has intensified in recent months.

The brand, famous for its sleek suits and evening gowns, is expected to spark interest from French luxury giants LVMH and Kering, sources within the groups told Reuters, adding that Armani was unwilling to sell a stake. to a foreign group.

In April, Armani told American magazine Vogue that he might consider partnering with another Italian company, opening the door for the first time to a possible partner.

He said the COVID-19 crisis had “made him open his eyes a bit.”

The Milanese fashion house, whose net turnover increased by 2.3% to 2.16 billion euros in 2019 after three years of decline, has not yet communicated its results for its 2020 financial year.

Its valuation, which represents around three times its turnover, could even reach 8 billion euros, according to an analyst based in Milan.

The couturier, who has no children, created in 2016 a foundation that should facilitate his succession and prevent his business from being bought or shattered after his death.

In June, after his last men’s show, Giorgio Armani hinted at preparing for his succession, saying that he was preparing the future of the company with his closest associates.

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