Two months after Giorgio Armani hinted at a potential M&A deal involving his privately-held brand, the Italian fashion brand is said to have been presented with a “strategic alliance proposal” with Ferrari by investment banks that would see Ferrari take over Mr. Armani’s 46-year-old eponymous label. Citing three different sources, Italian media outlet Il Sole 24 Ore reported on Wednesday that the merger would include a share swap in furtherance of which Armani would take a 15 to 20 percent stake in the 74-year-old Italian automaker by way of a reserved capital increase, enabling Mr. Armani to become a key shareholder in the new group, while also presenting a potential “solution” to questions about the future management of the Armani group.
Both parties have reportedly denied the deal, with Ferrari’s majority shareholder Exor N.V. citing its desire to maintain “the stability of Ferrari’s shareholding structure,” and Armani dismissing any interest in the potential plan. Il Sole 24 Ore has, nonetheless, called the potential tie-up a “working hypothesis” for the moment. Reuters reported on Wednesday that while “analysts dismiss the possibility of a merger between Ferrari and Armani, they do not rule out interest from Exor in the fashion brand,” as TFL reported in April.
Talk of a share-for-share exchange between the two Italian luxury stalwarts comes as Exor N.V.’s historically non-fashion focus appears to be changing. The group’s acquisitions of the formerly Hermès-owned Shang Xia and its 24 percent stake in footwear brand Christian Louboutin have prompted speculation among analysts that it may be looking to build a luxury conglomerate around Ferrari – one of the world’s most esteemed luxury entities – under the watch of John Elkann, who is the Chairman and CEO of Exor, and the grandson of Fiat founder Giovanni Agnelli.
While Exor has pushed back against suggestions that it is aiming to build a luxury-specific group like LVMH, Richemont or Kering, with a spokesman asserting in March that “Exor remains a family-owned investment company with a diversified portfolio,” as we previously noted, a push by the company into the luxury sphere makes sense in light of the sheer depth of Exor and the Agnelli family’s understanding of – and connections in – that sphere. For instance, the expertise that the group has built as a result of its majority ownership of Ferrari – which operates more in the luxury space than the traditional auto market – is integral to Exor’s quest to build time-tested, valuable companies, and could easily be applied to building more fashion-oriented luxury brands.
Elkann appeared to echo this – and maybe allude to addition industry acquisitions – in his annual letter to Exor shareholders, which was released in April, stating, “Over the years, we have developed considerable knowledge about the luxury sector and our ownership of Ferrari has allowed us to understand better the art of building luxury brands.”
Beyond that, there are significant synergies between Ferrari and Armani. The parties recently announced a multi-year tie-up in furtherance of which Armani will manufacture branded clothing for the Scuderia Ferrari racing team’s off-track duties, for instance. And hardly a one-off partnership, the recently-revealed F1 sponsorship follows from an existing partnership between the two, which was announced in 2019, and will see Ferrari roll out its own luxury-level apparel and accessories collections with the help of Armani, as it continues to cut down on its formerly expansive licensing program in favor of fewer – more upscale – initiatives. The first offerings from that collection are set to be presented in a runway show in Maranello, Italy – the home of Ferrari’s longtime headquarters – on June 13.
Reflecting on the parties’ fashion-specific tie-up, and potentialy foreshadowing a more significant venture, Mr. Armani – whose company recently joined with Belgian pharmaceutical entrepreneur Marc Coucke’s investment company Alychlo NV to back the initial public offering of the Italian Sea Group on the Milan Bourse – revealed in a statement in March that “more than ever,” that the fashion brand and the Prancing Horse “need to pull together as a system to promote Italian excellence, creating a synergic dialogue among different disciplines.”
And not to be overlooked, Ferrari confirmed on Wednesday that it has landed on a new chief executive to replace Louis Camilleri, who stepped down in December. According to Reuters, Ferrari has named Benedetto Vigna, who currently leads Analog, Micro-electromechanical Systems and Sensors group, which is the largest division of Geneva-based chip maker STMicrolectronics. While names such as Marco Bizzarri, who is currently in the role of president and CEO of Gucci, were in the running for the top job at Ferrari, sources for TFL say that Ferrari ultimately opted to look beyond fashion/luxury in light of the fact that the auto industry is in the midst of an automation-centric overhaul and Ferrari wants to lead the new chapter for the sector.
In a statement on Wednesday, Ferrari chairman John Elkann said that Vigna, who is slated to start on September 1, has a “deep understanding of the technologies driving much of the change in our industry, and his proven innovation, business-building and leadership skills, will further strengthen Ferrari and its unique story of passion and performance, in the exciting era ahead.”