By: Ilana Siyance
Italian luxury brand, the Ermenegildo Zegna Group, is jumping on the band wagon, merging with a special-purpose acquisition company in order to go public.
As reported by the Wall Street Journal, the deal would value the Italian menswear company at $3.2 billion, including debt, and will offer funding for more future acquisitions, following the new trend for consolidation hitting the fashion industry. Zegna, which includes American fashion brand Thom Browne purchased in 2018, plans to list on the New York Stock Exchange after merging with a blank check company or SPAC, which makes it easier to go public rather than an Initial Public Offering. The SPAC it struck a deal with is owned by London-based private-equity firm Investindustrial, which is chaired by Sergio Ermotti, who is the former chief executive of UBS Group AG .
Zegna has been privately owned by The Zegna family for over a century. The family will receive around $550 million in the deal, which is expected to close by the end of the year. They will get $250 million to facilitate future acquisitions. The Zegna family would retain a 62 percent stake in the company. Gildo Zegna, the company’s chief executive and the founder’s grandson, said his family will remain at the helm of the company even after the merger.
Zegna boasts close to 300 directly owned stores around the world, and has about 6,000 employees. The company had revenue equal to about $1.5 billion in 2019, and close to $1.15 billion last year. This year the company is on track to recover most of that 25 percent decline, with revenue close to $1.5 billion. In 2019, Zegna’s profits were roughly $43.7 million, while it had losses of $51.75 million last year.
Italian luxury brands have been scooped up of late by buyout offers, many of them from two French conglomerates, namely LVMH Moët Hennessy Louis Vuitton SE and Kering SA. Already Fendi, Gucci and Bottega Veneta have been bought out by the giants. The buyout trend was likely facilitated by the pandemic which greatly impeded the fashion industry by halting tourism last year. The smaller designers had less clout to withstand the declines in revenue. The bigger companies already had developed strong e-commerce operations allowing them sell online during the global shutdowns, and in the continuing aftermath of the pandemic in which travel is still restricted.