The Blackstone Group L.P. (NYSE:BX) is reportedly near a deal to buy a minatory stake in the Italian luxury brand group Versace. That’s according to a report from the Financial Times. Today the Versace family was expected to give Blackstone exclusivity to buy a 20% stake in the company, according to the website’s sources.
Blackstone’s offer values Versace at €1 billion
The sources said The Blackstone Group L.P. (NYSE:BX)’s offer could grant a valuation for the Italian designer as high as €1 billion, including debt. However, they also said that the deal hadn’t been finalized. If Blackstone is able to close it, then the deal would be the firm’s first step in the luxury fashion industry.
The Blackstone Group L.P. (NYSE:BX) reportedly competed with Investcorp, which at one time owned Gucci. Sources also indicated that CCMP, a U.S.-based buyout firm, was also involved in the negotiations at an earlier stage in the discussion.
Versace seeks to expand
Donatella Versace became the brand’s designer after her brother Gianni was murdered in 1997. She currently owns 20% of the company, while her daughter Allegra owns 50% of it.
The Versace family has been trying to raise approximately €150 million in order to expand. If they close the deal with The Blackstone Group L.P. (NYSE:BX), then some family members are expected to sell some of their shares. At first, the family wanted to get the company publicly listed within the next three years.
Private-equity firms see value in luxury brands
Although Versace has been lagging behind rivals in sales, profits and expansion, private-equity fund managers have seen potential. The brand is one of the most well-known, recognized names in the fashion industry. However, it is also one of the last well-known Italian luxury brands remaining family-owned.
Gian Giacomo Ferraris became the company’s CEO in 2009, and since then, the luxury fashion brand has been in the midst of a turnaround. Versace had been losing money before he took the helm, but now the company is estimated to generate about €70 million in EBITDA.
Versace isn’t the only luxury fashion brand private-equity firms have taken an interest in lately. Last year, KKR paid approximately €600 million to acquire the French clothing designer Sandro Maje Claudie Pierlot. Also TowerBrook purchased True Religion, a high-end denim designer. In addition, the Financial Times reports that its sources Permira, a London buyout group, has been courting Italian dress designer Roberto Cavalli for some time.