Kering’s €1.7B Valentino Deal Sets Stage for Full Takeover by 2028

Some of the biggest industry news this week came in the form of M&A. Kering made headlines on Thurs., for instance, when it revealed that it entered into a binding agreement with Mayhoola to take a 30% shareholding in Valentino in exchange for €1.7B ($1.9B). Quite notably: The parties said that the agreement includes an option for Kering to acquire 100% of the share capital of Valentino “no later than 2028.” They also confirmed that the transaction is “part of a broader strategic partnership, which could lead to Mayhoola becoming a shareholder in Kering.” 

In the meantime, the Gucci, Saint Laurent and Bottega Veneta-owner will become “a significant shareholder [in Valentino] with Board representation,” while “Mayhoola will remain the majority shareholder with 70% of the share capital & will continue to execute on [its] successful brand elevation strategy.”

The transaction is a notable one at least in part because it’s a clear demonstration of the enduring consolidation in the luxury sphere, with giants like LVMH, Kering & Richemont – the latter of which announced today that it has acquired a controlling stake in Italian footwear brand Gianvito Rossi – continuing to snap up any available entities. This enables the acquired companies to benefit from shared group resources & synergies, including greater negotiating power when it comes to advertising, real estate & distribution deals, etc. It also makes it more difficult for non-conglomerate-backed companies to successfully compete.

Reflecting on the deal, Bernstein analyst Luca Solca stated, “We salute this agreement as promising: Kering has an established track record managing & developing fashion brands. Valentino could be seen as the Italian equivalent of Saint Laurent: a business Kering has been able to create value with.”

The Legal Angle: The transaction – which values Valentino at almost $6B – follows from “years of speculation over the future of the Italian fashion house,” as the WSJ put it. TFL readers will know that we have been pondering that very scenario in recent years in connection with an ongoing legal battle that sees Valentino sparring against Mario Valentino in the U.S. & Italy. Valentino waged a lawsuit against like-named Mario Valentino in the U.S. back in July 2019, arguing that  Mario Valentino & its U.S. licensee are on the hook for false advertising, unfair competition, etc. for “actively engaging in a campaign to trade off Valentino’s goodwill in the U.S. handbag market.”

At its core, the matter centers on the co-existence agreement that the two Valentinos entered into some 4 decades ago that places notable limits on how they can use the “Valentino” brand name on leather goods. Valentino, for example, needs to use “Valentino” and “Garavani” together (and not just “Valentino” on its own) when advertising & selling leather goods to minimize consumer confusion between the two companies.

The interesting element for us now is the extent to which the still-ongoing bi-national TM fight was motivated by the Italian fashion brand’s desire to sell & get the best valuation should it opt to do so. As I wrote last year, Valentino has no shortage of TM rights in/registrations for its name ( “Valentino” for use on eyewear; “Valentino Garavani” on handbags, footwear & clothing; its V logo on nearly any category of goods, etc.), all of which another party would take ownership of if it acquired the Valentino brand. However, it’s difficult not to imagine that an acquiring party might take issue with the fact that one critical element is missing from the brand’s portfolio: Its ability to use “Valentino,” on its own, on leather goods & footwear.

The Bottom Line: The current lack of a super-tidy TM portfolio for Valentino clearly hasn’t stood in the way of a deal, both the Kering deal and the Mayhoola and Permira acquisitions before that are proof. However, it will be interesting to see how the web of TM cases between Valentino & Mario Valentino is ultimately resolved & the extent to which such outcomes will impact the potential for – and the price of – a full-buy-out of the Valentino brand by Kering come 2028.

In one development in the multi-pronged battle: On July 12, the Court of Milan sided with Valentino in the opposition proceedings it waged in 2019 against Mario Valentino’s attempt to obtain payment of approximately €14M in penalties for the use of the “Valentino” TM by Valentino for advertising, which Mario Valentino alleged violated the Court’s December 2017 interim order. (More to come on the status of the Valentino v. Mario Valentino cases soon.)

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