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Business
Cavalli Enters Exclusive Talks With Clessidra
From the Wall Street Journal of Wed, 17 Dec 2014 18:59:39 EST
From the Roberto Cavalli Spring/Summer 2015 collection during Milan Fashion week in September.
From the Roberto Cavalli Spring/Summer 2015 collection during Milan Fashion week in September. Reuters

Italian fashion firm Roberto Cavalli SpA and private-equity fund Clessidra SGR said Wednesday they have entered exclusive talks to sell a majority stake in the Cavalli group to the fund.

The parties said they aim to reach an agreement by March 2015. Should the deal proceed, Clessidra Executive Vice Chairman Francesco Trapani would be appointed president of the Cavalli Group. Designer and founder Roberto Cavalli would remain a stakeholder. No further details were disclosed.

The agreement ends a long series of attempts by Cavalli to find an outside investor to invest money in the fashion firm and support its growth. The attempts, which began about eight years ago, stumbled on price as Roberto Cavalli expected to get a much higher price than what investors were prepared to pay.

According to Mario Ortelli, analyst at Sanford C. Bernstein, the Italian company could be worth €500 million ($616.8 million).

The label—known for its animal prints and over-the-top style—posted revenue of €201 million in 2013, up 9% compared with the year before. Its earnings before interests, tax, depreciation and amortization, or Ebitda, was around 11% of net revenue. No figures for 2014 were provided.

Cavalli, like many small and medium-size Italian firms, is stuck with its small size preventing it from investing heavily in expanding abroad in markets like the U.S. and Asia, and an unclear separation between ownership and management. Italian fashion house Versace, for example, was in a similar situation and struggling years ago before the owners hired an external manager who turned it around and was eventually able to attract investments by Blackstone earlier this year.

Last month, negotiations with Russia’s VTB Capital, the investment arm of Russia’s second-largest state-controlled bank VTB, stumbled as the company’s valuation was seen as too high, The Wall Street Journal reported.

In 2006 Italian fund Investitori Associati made an offer valuing Cavalli at €€550 million. The business then deteriorated in the following years mainly because its main lines, Cavalli and Just Cavalli, lost ground.

Wednesday’s agreement is also the second attempt by Clessidra to buy a stake in Cavalli. In 2009, the fund entered into exclusive negotiations with the house valuing it around €400 million. But the talks died.

Write to Manuela Mesco at manuela.mesco@wsj.com



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