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LVMH, Prada pursue Fendi?
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September 30, 1999: 9:28 a.m. ET
Report: French luxury group, Italian fashion house vie with Gucci for Fendi
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LONDON (CNNfn) - The maker of Moet champagne and Louis Vuitton luggage is joining forces with Italian fashion house Prada in a bid to buy design firm Fendi for as much as $750 million, according to published reports -- a deal that would foil a possible takeover attempt by archrival Gucci.
French luxury goods maker LVMH Moet Hennessy is preparing a joint bid with Prada for control of Fendi, a closely held design firm that is the latest hot number in Europe's fast-consolidating luxury goods sector, the Wall Street Journal reported.
The bid could value Fendi, known for its signature "baguette bag," at about 450 million pounds ($740 million), according to London's Times.
Sources in Milan told the newspaper that LVMH's billionaire boss, Bernard Arnault, and his counterparts at Prada had won the allegiance of Paola Fendi, the eldest of the five sisters who control Fendi.
The bidding partners are also believed to be intent on wooing Fendi's chief designer, Karl Lagerfeld, as part of any buyout deal. Lagerfeld reportedly has the option to quit if Fendi falls prey to a bidder he opposes.
People familiar with the matter told the Journal that Fendi's asking price has jumped as the sisters have played one suitor against another. The Journal said the current asking price could be as high as 1.6 trillion lire ($870 million), even though the company had revenue of only 585 billion lire in 1998.
Aside from Gucci, others reportedly interested in Fendi include Texas Pacific Group of the United States and upscale jeweler Bulgari.
For LVMH, Fendi would be the latest acquisition after the French company bought Swiss watchmaker TAG Heuer and on Wednesday a 10 percent stake in the Formula One racing team led by Alain Prost of France. The company said it wants to develop a line of fashion accessories in collaboration with Prost.
The Journal said Arnault is also eyeing a buyout of Swiss watchmaker Ebel. Meanwhile, Gucci has been casting about for acquisitions of its own after French retailer Pinault Printemps Redoute invested $2.9 billion in the Italian fashion house this year -- becoming its largest shareholder and helping it thwart an unsolicited takeover bid from LVMH, the newspaper said.
But the paper quoted Gucci's chief, Domenico de Sole, as expressing reservations about going full throttle in a bidding war for the increasingly expensive Fendi. "We're not crazy," he said. "There's a limit as to what we can pay to add value to the shareholders."
LVMH shares fell 0.6 percent in Paris Thursday while Gucci lost 1.5 percent in Amsterdam.
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