Nov 23, 2015
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Tod's splashes out $440 mln on Roger Vivier shoes

Nov 23, 2015

Italian luxury goods group Tod's has agreed to buy the prestigious Roger Vivier shoe brand from Tod's biggest shareholder for 415 million euros ($440 million), a price which some analysts said looked expensive.

Tod's, controlled by Italy's Della Valle family, currently produces and sells Roger Vivier shoes in return for royalty payments under a licensing agreement due for renewal next year.

A screenshot from the Roger Vivier homepage - Roger Vivier

Management had previously said it was determined not to lose the rights to the profitable French brand, famous for its buckled shoes and also owned by the Della Valle family, either by buying the business or by renewing the licence.

While the vendor will reinvest part of the proceeds in a reserved rights issue at the fashion group to help it pay for the purchase, Italian broker Equita said the deal's price tag exceeded the net present value of the royalties and cut its price target on the stock to 71.5 euros from 76 euros.

Shares in Tod's recovered initial losses of more than 3 percent to trade up 0.06 percent at 79.15 euros by 1023 GMT, a gain of 9.7 percent so far this year.

Exane BNP Paribas analysts said in a note the only benefit from the deal for Tod's was saving annual royalty payments which totalled 9.2 million euros in 2014.

"This is very expensive," the broker said, calculating an implicit multiple of around 40 times earnings before interest and tax.

"The Della Valle family is re-investing in Tod's, but at a depressed valuation," it added.

Under the deal Gousson, a company controlled by Tod's Chairman and Chief Executive Diego della Valle and his brother Andrea, will invest 207.5 million euros in buying new Tod's shares at a price of 83.53 euros each. That compares with a closing price on Friday of 79.1 euros a share.

As a result, Diego Della Valle's stake in the group will rise to 60.7 percent from 57.5 percent, the company said.

A shareholder meeting will be called in January to approve the deal.

$1 = 0.9422 euros


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