Early last year Diego Della Valle, one of the giants of Italian business, had an important topic to discuss with his family at his 17th century estate: their vision for the future of Tod’s, the luxury shoe and bagmaker founded by his grandfather more than a century ago.
After an attempt to take the group private had failed, he and his younger brother Andrea wanted to talk to their children at the villa in Italy’s hilly Marche region about their commitment to managing the business famous for its leather bags and suede loafers.
Over several Sunday lunches they were reassured by the responses of Diego’s eldest son Filippo, 26, who works in Tod’s marketing department, and Andrea’s son Leonardo, 24, who works at Schiaparelli, one of its other brands. Eventually they also decided they needed a partner to help revitalise the group’s performance, according to an insider.
That partner has now arrived in the form of LVMH-backed private equity firm L Catterton and a deal that will bring down the curtain on Tod’s more than two decades as a public company on the Milan stock exchange.
Under the proposal, announced last weekend, the Della Valle family will retain their majority but reduce their stake from 64 to 54 per cent, while L Catterton will take a 36 per cent stake in Tod’s and LVMH will retain its 10 per cent holding. The deal values Tod’s at about €2bn including debt.
At its heart is Diego Della Valle, one of the most flamboyant and outspoken personalities in Italian business and chief executive and chair of the family business since 2000.
Formerly an investor in NTV, Italy’s private railway operator, other past investments span the sports, banking, media and design industries.
Known for his staple silk cravats and forthright manner, he is proud of being Italian and has not held back from openly criticising other Italian family-owned businesses for moving their headquarters abroad and cutting local jobs. Tod’s headquarters remain in the small town of Casette D’Ete and it was the first Italian luxury group to go public in its native country, with Gucci having chosen New York for its IPO.
Della Valle is confident, however, that Connecticut-based L Catterton will boost Tod’s desirability and allow it to focus on investments in marketing and R&D, he told the Financial Times.
“This deal will help the group develop through investments and face new challenges,” Della Valle said in a statement after the delisting plans were announced. “I think this is the best choice strategically.”
Although sales at Tod’s, whose brands include shoe label Roger Vivier and clothing and accessories labels Schiaparelli, Fay and Hogan, increased 11.9 per cent last year to €1.13bn, its share price has remained stubbornly low. At around €43 per share, the stock is about 9 per cent below its IPO price in 2000.
Analysts have argued that improvements in Tod’s product offering and earnings have not been reflected in the share price and that it is complicated for small luxury groups to execute turnarounds as listed companies.
L Catterton — established in 1989 but launched in its current form in 2016 through a partnership between a private equity firm, French luxury group LVMH, and founder Bernard Arnault’s family investment vehicle — has restructuring experience and specialises in consumer brands.
The group has a record of profitable exits — such as 2023’s $8.6bn listing of German sandal maker Birkenstock — and Tod’s has a good potential to turn into another success story, say analysts.
Della Valle and Arnault have been friends for more than two decades and the deal with Tod’s deepens the already strong links between the two at a time when LVMH ’s sales and share price are storming ahead. LVMH has been a long-term investor in Tod’s, first taking a stake in 2000, while Della Valle has sat on the board of the world’s biggest luxury group since 2002. The Italian was a guest at the wedding of Alexandre Arnault in Venice in 2021 while the LVMH boss has vacationed at Della Valle’s summer home on the island of Capri.
The deal with L Catterton has revived speculation among industry insiders and analysts that LVMH could eventually buy Tod’s, adding to its stable of clothing and apparel brands which also include Christian Dior and Céline.
“It could be seen as an hors d’oeuvre to a future sale to the French at a higher price than what they would have obtained now,” said one analyst who asked not to be named.
But Della Valle, who has always refused to relinquish control, pushed back against the suggestion. “I’m used to this kind of speculation . . . but it makes no sense as we could have sold the group directly to LVMH if that’s what we wanted,” he said.
Paris-based conglomerate Kering owns brands including Gucci, Loro Piana and Bottega Veneta while LVMH bought Bulgari in 2011. The issue of succession has been a recurring theme within Italian family-controlled luxury businesses.
One senior Italian luxury executive suggested it would be disappointing if “Della Valle of all people” ultimately ended up selling to the French — nodding to the 1 per cent of Tod’s profits he donates annually to local Marche communities and his appearances on Italian television touting the benefits of giving back to workers and disadvantaged groups — although they added that smaller luxury groups “struggle” in an industry dominated by conglomerates.
Unlike in 2022, when the Della Valle family attempted a delisting by offering minority shareholders €40 a share but failed to reach the 90 per cent threshold required, the current attempt is expected to go through.
If the parties involved in the deal cannot reach the 90 per cent ownership threshold needed to delist the company, L Catterton has said it will take the group private by merging it into the vehicle it used to launch the offer, which does not require an ownership threshold but must be put to a shareholder vote.
This would probably pass as the Della Valles and LVMH’s combined 64 per cent stake would be enough to satisfy the requirement in Italian law that at least 50 per cent of the share capital be represented at such a vote, and receive at least two-thirds backing of this.
Bernstein analyst Luca Solca said that for the time being the partnership with L Catterton would “allow [Tod’s] to reap many of the benefits that being part of a conglomerate like LVMH could offer, but without giving up the opportunity to create value independently.”
Della Valle added: “Our new partners will benefit us . . . it lightens my responsibilities toward my family, workers, our whole group which is indeed an Italian group.”
Additional reporting by Adrienne Klasa
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