Ermenegildo Zegna, the Italian luxury fashion group, has agreed to go public by combining with a special-purpose acquisition company in the United States in an agreement that gives the company a business value of $ 3.2 billion. dollars and gives the trend to consolidation that sweeps the luxury industry.
Zegna, a family-owned company since its founding in 1910, will raise $ 880 million combined with the Spac launched by European private equity group Investindustrial and chaired by former UBS executive Sergio Ermotti.
A portion of the funds raised will go to help Zegna invest in its men’s clothing business and give it the firepower to hunt down other brands to acquire, based on its purchase of $ 500m of American luxury brand Thom Browne in 2018.
Gildo Zegna, the 65-year-old executive director, told FT: “We could have been independent for another 100 years. But the timing is right and the world has changed a lot and luxury has become very challenging. ”
Zegna, which in an interview before the pandemic had said he had no interest in taking the business public, he added: “The opportunity has come and we have taken advantage. The ladder becomes important… with the right partner… we can do a super job taking on new ones.” opportunities if they come forward ”.
The decision to list is in contrast to the path that many independent, family-run luxury brands have taken – even before the pandemic hit the industry – to sell to larger conglomerates or private investors.
The family-run Italian luxury brand Etro will be the last to follow this trend on Monday, when it is expected to confirm the sale of a majority stake worth its business to 500 million euros to L Catterton, the group of private equity supported by LVMH.
Under the terms of the Zegna transaction, the family will sell part of its stake and hold 62 percent of the combined company, which receives $ 2.5 billion in equity value.
Revenues include about $ 400 million raised last year by Investindustrial Acquisition Corp., the New York-listed entity with which Zegna will merge, as well as $ 250 million from private investors it refused to call.
Another $ 225m will be from Investindustrial, the investment firm managed by Andrea Bonomi, once the deal is completed. Bonomi, himself heir to an Italian industrial family, has courted Zegna since January to make a deal after months of negotiations.
The investment in Zegna will give Investindustrial a 11% stake in the company, with shares it will receive as a Spac sponsor. Investindustrial has made a commitment for a three-year lock-up on the shares acquired through its investment.
Zegna was founded by Gildo’s grandfather, Ermenegildo, as a supplier of luxury textiles in the city of Treviso in northern Italy.
The company has become known for its good men’s clothing since the 1960s, and was one of the first luxury groups to enter China in 1991, establishing early brand recognition and, most importantly, building strong relationships. with owners in what is now their largest market.
As the demand for men’s clothing has declined in recent years, the company has shifted its attention to what Gildo Zegna describes as “luxury hobbies,” and has invested in its supply chain “sheep for buy ”while others have sold their factories to focus solely on design, marketing and merchandising.
After acquiring Thom Browne, Zegna told the FT that the group had taken the brand further, doubling sales. Zegna, which employs more than 6,000 people, also has close ties with Chanel, Tom Ford and Gucci, to whom it supplies fabrics.
Gildo Paolo’s cousin, sister Anna and two sons Edoardo and Angelo also worked for the business. Asked if the decision to list his actions meant that an executive outside the Zegna family could eventually succeed Gildo, Bonomi replied that it would be the “right thing” for the next chief executive to be a Zegna but that he would fall to the merit. .