Qatar-backed Louis Vuitton in $2.57bn acquisition
LVMH Louis Vuitton Moet Hennessy, the French luxury goods conglomerate part owned by Qatar, has acquired 80 percent of Italian luxury cashmere clothing brand Loro Piana for 2 billion euros ($2.57bn), boosting the firm’s presence in high-end handcrafted products popular with Asian buyers.
The deal gives Loro Piana an enterprise value of 2.7 billion euros, or more than 3.8 times the company’s expected 2013 sales of 700 million euros.
Loro Piana, which is also an integrated manufacturer of fine yarns, has been enjoying average annual sales growth of 17 percent over the past three years, which analysts said would help make up for slower growth at other LVMH brands such as Louis Vuitton.
“The price is steep but it is a fairly unique business,” said Paul Swinand, analyst at market research house Morningstar.
Loro Piana, which makes 30 percent of its sales in Asia, has enjoyed continued strong demand in China even as some other luxury brands such as Gucci and Louis Vuitton have experienced slowdowns.
Earlier this year, it said it expected sales to grow a little over 10 percent this year, after growth of 13.1 percent to 630 million euros ($815m) in 2012.
Consultancy Bain & Co expects sales in the global luxury goods market to rise 4-5 percent this year, cooling from 5 percent last year at constant exchange rates.
LVMH said it planned to expand the Italian brand’s leather goods offering as well as its footprint worldwide. Loro Piana gets 85 percent of its revenue from its 185 directly operated stores and shop-in-shops.
LVMH said it would finance the deal with cash and new debt and expected the transaction to close at the end of the year.
The takeover comes two years after LVMH’s purchase of Roman jeweller Bulgari for 3.7 billion euros and more than a decade after it acquired leather goods maker Fendi and fashion label Emilio Pucci.
Sovereign wealth fund Qatar Holding holds a 1.03 percent interest in the company, which was valued at around 699m euro ($914m) last year.