Tod, the luxury Italian shoe and bag maker, has announced plans to become private. The deal will be with L Catterton a private equity firm backed by LVMH. This ends more than 20 years as a publicly traded company in Milan.
After the announcement of the transaction late Saturday night, L Catterton will have a 36% stake in Tod’s, while the Della Valle Family, who currently control the group, will retain their majority ownership, with 54% of the shares.
L Catterton, a company that was formed in 2016 by a partnership of a private equity group, French luxury group, LVMH, and the family investment vehicle of founder Bernard Arnault, will pay €43 for each share, for a sum of €512mn. This is an 18% premium over Friday’s closing price of Tod’s. Tod’s is valued at approximately €1.4bn, excluding debt.
After the transaction, LVMH will still retain its 10% stake in Tod’s.
L Catterton stated in a press release that “delisting” is a prerequisite to ensuring the [Tod] future growth and consolidation programs. . . “[with] increased management and organisational flexibilities, quicker decision-making and implementation times”.
In October , the private equity firm, which has also invested in fashion brands APC, Etro and Equinox (a high-end gym chain), listed German orthopaedic shoes company Birkenstock. This was one of the biggest IPOs in New York this year.
Tod’s founding families first announced delisting as part of their ambitions to turn around the company. The group’s earnings have been pressured for most of the last decade, as its brands such as Roger Vivier and Fay, as well as its namesake Tod, have declined in popularity. The plan was abandoned after the Della Valles failed to meet the required ownership threshold to take the company private.
The family stated that it would be “more challenging” to achieve their long-term goals as a publicly traded company, “given” the listing requirements which includes publishing earnings updates.
Tod’s performance last year improved. The group announced in January that its sales would increase by 11.9% in 2023, to €1.13bn. All brands saw gains in double digits.
Thomas Chauvet wrote in a Citi note that the company’s shares had gained 18% in the weeks following the announcement of its better results, for a total market value worth €1.16bn. However, they remain below the price at which the Della Valle family offered to buy the company last year, “despite the clear improvement in Tod’s Brand Desirability and Earnings Momentum,” he said.
He added, “[This] highlights how difficult it is for small luxury companies to make a turnaround under the scrutiny and pressure of the public markets.”