Translated by
Nicola Mira
Oct 9, 2017
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Kering may sell Puma in 2018, analysts say

Translated by
Nicola Mira
Oct 9, 2017

This particular old chestnut may soon be history. Ever since PPR (now Kering) purchased Puma in 2007, financial analysts have regularly floated the idea of the sport-lifestyle brand's sale, pointing the finger at the lack of synergy between Puma’s business and that of the group's luxury labels such as Gucci or Balenciaga.

Is Puma to be sold soon? - Puma

Now more than ever, the scenario seems plausible, if we are to believe the statements issued by a series of major banks and consultancy firms in the last few weeks, in which Puma's sale in 2018 is openly heralded.

There are several strong indicators pointing in this direction. As we reported last May, François-Henri Pinault has decided to take a step back, and relinquished his position on the German group's board of directors. Chiefly though, Puma's stock market valuation is definitely on the up, and it is now close to €330 per share (as of 5th October), the same price paid ten years ago, when Kering spent €5.3 billion for the brand. Puma's sales are booming, and its financial indicators have been greatly improving for several quarters.

"[Puma's] dynamic market performance and its rallying operational margins could pave the way to a sale," stated Thomas Chauvet, an analyst at Citi, quoted by Reuters. The news agency also reported that a press release by HSBC surmised that the Kering group has "finally recovered its outlay, after ten years, making Puma's sale more likely."

Nowadays, a valuation in the region of €5 billion for Puma may well be satisfactory for Kering (owner of an 86% stake in the brand), while in 2016 François-Henri Pinault indicated that he did not foresee a sale of the brand either in 2016 or in 2017.

The fact remains however that, though Kering may intend to sell, there are very few buyers which could afford an acquisition of this magnitude, for a brand which is not yet as profitable as the likes of Nike or Adidas. At the same time, the possibility of Reebok's sale by Adidas also regularly crops up in the industry. Observers have mentioned Asian investment funds, without really putting forward any convincing name.

Reuters reported that Kering has several financial alternatives at its disposal: it could put Puma on the market, or demerge and distribute the equity among its shareholders. Through the sale, the French luxury goods giant could generate fresh capital for broadening its brand portfolio, and may prioritize an acquisition in the highly dynamic jewellery industry.

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