On Monday, Tod's SpA (TOD:IM) (OTC: TDPAY) received a buyout offer from L Catterton, a private equity firm with ties to luxury conglomerate LVMH (EPA:LVMH). The offer, priced at €43 per share, aims to acquire a 36% stake in the Italian luxury fashion company. This price is an approximately 18% premium over Friday's closing stock price and about 27% higher than the six-month average, setting the company's valuation at roughly €1.4 billion.
Citi has maintained a Neutral rating and a €35.00 price target on Tod's shares, despite the offer which suggests a significant premium. The proposed acquisition includes 3.46 million shares from the Della Valle family, who will retain a 54% majority post-delisting, and the entirety of the free float, excluding LVMH's 10% holding. If successful, the Della Valle family, L Catterton, and LVMH would control 54%, 36%, and 10% of Tod's, respectively.
The transaction follows an unsuccessful attempt by Tod's controlling shareholder Diego Della Valle to delist the company in August 2022 at €40 per share, which saw only 49% of minority shareholders tender their shares. The current offer is 7.5% higher than the previous bid, which may still not satisfy minority shareholders who believe in the ongoing turnaround of Tod's brand and the undervalued potential of the Roger Vivier brand. Roger Vivier, a highly profitable luxury footwear brand within Tod's portfolio, reported sales of €287 million.
Citi's analysis suggests that the luxury sector's brand turnarounds, which can take several years, might be hindered by the pressures of public markets. The partnership between Diego Della Valle and Bernard Arnault, which has spanned over two decades, could indicate future strategies to take Tod's private, thus allowing a more profound restructuring plan without the volatility of quarterly results in the public eye.
As the market processes this potential acquisition, stakeholders are considering whether the offer sufficiently compensates for the progress in Tod's brand revitalization and the intrinsic value of its high-end subsidiary, Roger Vivier. The outcome of this tender offer could reshape the ownership structure of Tod's and influence its strategic direction in the luxury goods industry.
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