July 17, 2013

LVMH stirs up the Italian luxury market, while Ferragamo and Brunello Cucinelli are increasingly attractive

Salvatore Ferragamo fall winter 2013 2014

Markets and financial analysts alike have taken notice of LVMH Moet Hennessy Louis Vuitton’s EUR 2.7 billion Loro Piana acquisition, as it has recently been stirring upwards a series of Italian fashion stocks and tipping them to be among the most highly desirable.

Salvatore Ferragamo is one fashion powerhouse topping the list. It reached a record EUR 25.26/share level after publishing its better than expected first quarter sales figures and is said to be among the most attractive buying targets. Furthermore, based on the price of LVMH’s Loro Piana deal, there are estimates saying that the Italian artisan could fetch in excess of EUR 29 per share, while Ferragamo’s overall price value is of EUR 4.2 billion.

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Even more valuable is Tod’s, which might cash in EUR 150 per share, for its total value of EUR 3.6 billion. But among the Italian blue chips there are also Brunello Cucinelli and online retailer Yoox, the latter seen to possibly reach as high as EUR 31.9 per share.

Jean-Jacques Guiony, LVMH CFO, commented at the Loro Piana acquisition press conference that the group’s M&A strategy is ‘’opportunistic’’. ’’We buy only the finest and most attractive brands if they become available.’’

And in a context set by LVMH having had at the end of last year EUR 2.2 billion in cash and Kering just behind, at EUR 2.1 billion -according to Bloomberg estimates-, Italian luxury being as alluring as ever and financing costs for Italian companies being sky high, chances are that such unmissable opportunities are just bound to come along.


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Photo source: Ferragamo