The past couple of months have demonstrated the enduring rise in fashion and luxury deals, the very ones that were expected to unfold in the wake of the COVID-19 pandemic. Lanvin-owner Fosun Fashion Group, for instance, acquired Italian footwear company Sergio Rossi in June, and a week later, LVMH Moët Hennessy Louis Vuitton assumed the outstanding 33 percent stake in Emilio Pucci, two decades after first acquiring a 67 percent ownership stake in the Italian fashion brand. This month, Swiss conglomerate Richemont took a 100 percent stake in Belgian luxury brand Delvaux, LVMH announced a minority stake in Phoebe Philo’s soon-to-launch eponymous label, L Catterton Europe revealed that it will acquire a majority stake in Etro, and in the biggest news of the week, LVMH made headlines when it confirmed that it will buy a 60 percent in Off-White.
Much has been made of growing number of M&A transactions, with many rightly pointing to the effect that the pandemic has in bringing these deals into fruition. As Ermenegildo Zegna Group CEO Gildo Zegna noted this week in connection with news that the privately-held Italian fashion group will go public on the NYSE later this year via a merger with Investindustrial Acquisition Corp., a special purpose acquisition corporation, “The luxury business has become very challenging,” making it even more difficult for independent brands to compete. Low interest rates and excess cash on hand for the likes of LVMH, Kering, and co. have further spurred the trend.
To date, conversations have largely centered on the impetus for these tie-ups, the deals that may still in the making (An acquisition by Prada? A deal between Exor and Armani, despite recent reports to the contrary? The sale of Valentino?), and what this wave of consolidations means for the industry as a whole. One thing that has not been discussed with the same frequency is the topic of goodwill and brand equity, and how these are impacted by M&A activity, such as the deals that are currently underway.
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