Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Italy's Zegna to list in the U.S. with $3.2 billion SPAC deal

EconomyJul 19, 2021 05:35AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Plywood covers the windows of an Ermenegildo Zegna store in Chicago, Illinois, U.S. October 13, 2020. REUTERS/Moe Zoyari

By Claudia Cristoferi and Silvia Aloisi

MILAN (Reuters) -Italian luxury group Ermenegildo Zegna will list in New York by combining with a U.S. investment vehicle, giving the menswear company an enterprise value of $3.2 billion and helping it expand in Asia and the United States.

The move is the latest example of an Italian family-owned fashion business luring outside investors to fund expansion, boost marketing spending and compete with bigger players, after the industry was hit hard by the coronavirus crisis.

"We could have remained private for another 100 years, but the timing was perfect and the world of luxury has become very challenging," Chief Executive Gildo Zegna, 65, told reporters.

Zegna, founded as a textile company in 1910 and now a leader in luxury menswear, will raise $880 million by combining with the U.S. special purpose acquisition company (SPAC) launched by European private equity group Investindustrial and led by Sergio Ermotti, former chief executive at Swiss bank UBS.

Under the deal, the Zegna family will sell a portion of their holdings and retain 62% of the combined company, which is being given an equity value of $2.5 billion.

The cash raised will help Zegna expand in China, which accounted for 35% of the group's 1.3 billion sales in 2019, and the United States. It will also help buy other brands, after its $500 million purchase of U.S. luxury label Thom Browne in 2018.

Gildo Zegna, whose "from sheep to shop" business includes much of its supply chain, said he had no intention of building a luxury conglomerate and would only acquire niche labels. He also said the group would stick to menswear.

"We have a clear strategy based on organic growth," he said.

'HEALTHY DIET'

The pandemic, which forced retailers to temporarily shut shops and froze international travel, hit smaller luxury brands harder than big groups like LVMH and Kering (PA:PRTP).

That has led some family owners to open up their companies to attract fresh funds. Etro, another Italian family-owned label, reached a deal on Sunday with LVMH-backed fund L Catterton to sell a majority stake.

Giorgio Armani, 87, said this spring he could consider joining forces with another Italian company. Reuters reported on Friday that John Elkann, scion of Italy's Agnelli family, has been exploring a possible tie-up.

Zegna said the pandemic had forced his business to undergo a "healthy diet", slashing operating expenses by 20% and cutting investments. He said he hoped sales in 2021 would come close to their 2019 levels after dropping by about 20% last year.

The group will merge with Investindustrial Acquisition Corp in a deal that will give Investindustrial an 11% stake in the Italian brand. The listing is expected this year and Ermotti and Investindustrial chief Andrea Bonomi, who will both join Zegna's board, said they had a long-term investment plan.

Italy's Zegna to list in the U.S. with $3.2 billion SPAC deal
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email