LVMH Ups Stake in Tod’s to 10% for Total of 74.5 Million Euros

MILAN — LVMH Moët Hennessy Louis Vuitton may have just revealed it wants to focus on its latest acquisition, U.S. jeweler Tiffany & Co., but late on Thursday evening, Diego Della Valle, chairman and chief executive officer of the Tod’s Group, revealed the French group had increased its stake in his company up to 10 percent.

Diego Della Valle & C S.r.l., a company controlled by the Italian entrepreneur, has entered into a sale and purchase agreement with Delphine S.A.S., a fully owned subsidiary of LVMH, for the sale of 2.25 million shares of Tod’s SpA, representing 6.8 percent of the capital. LVMH is a longtime investor in Tod’s, already owning 3.2 percent. The price per share is calculated at 33.10 euros, the average price of Tod’s shares over the 15 trading days preceding the signing, for a total of 74.5 million euros. The transaction will be executed on April 28.

As a result, Della Valle will own, directly and indirectly, 63.64 percent of Tod’s outstanding shares and LVMH will own 10 percent.

“The friendship with Diego Della Valle and his family goes back over 20 years, a relationship cemented by common human and professional values,” said LVMH chairman and CEO Bernard Arnault. “We are very happy to reinforce further this partnership.”

A “delighted” Della Valle echoed Arnault, saying that he and his family “share the values of luxury, quality and products appeal” with the French luxury tycoon. “This may represent an excellent reason to consider further opportunities to be taken in the future ahead,” he concluded cryptically.

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Analysts have for quite some time speculated on a possible sale of the Tod’s Group, which — in addition to the Tod’s brand — includes Hogan, Fay and Roger Vivier, pointing to Arnault and LVMH as a possible buyer. Della Valle has repeatedly denied the company was for sale and has over time bought back shares with his brother Andrea.

Tod’s has been rejuvenating its offer, reaching out to Gen Z, most recently appointing digital entrepreneur Chiara Ferragni as a board member, focusing on digitalization and working on streamlining its wholesale distribution, but the company has been reporting sets of results that left analysts hoping for a turnaround.

Ferragni’s appointment caused Tod’s shares to spike 12.1 percent on April 9, meaning Arnault would have paid more for his most recent share purchase than earlier in April.

As reported, solid double-digit growth in Tod’s online business and in China in the fourth quarter failed to offset a fall in revenues for the full year at the group, which was impacted by the effects of the COVID-19 pandemic.

In the 12 months ended Dec. 31, Tod’s reported a 30.4 percent decrease in preliminary sales, which amounted to 637.2 million euros, compared with 916 million euros in 2019.

Tod’s also revealed it had signed a credit agreement with a pool of banks, coordinated by Intesa Sanpaolo SpA with IMI Corporate and Investment Banking Division, for a maximum total of 500 million euros. The sustainability-linked loan has a five-year maturity and is structured in a term facility of 250 million euros and a revolving credit facility of an additional 250 million euros.

“We have further strengthened our capital structure, to be ready to evaluate any opportunities that the market can offer in times like this,” Della Valle said in January commenting year-end results.

There has been a brisk uptick in M&A deals in Italy, in the wake of the COVID-19 pandemic, in light of the generational shift and the need for companies to build mass and power. Earlier this week, Etro admitted it was open to consider partnerships as L Catterton was rumored to be eyeing the Italian brand. OTB buying Jil Sander and Moncler the Stone Island label are two recent examples.

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