Shares of Italian shoemaker Tod's soar on private-equity bid

By Barbara Kollmeyer

Shares of Tod's SpA surged on Monday after a delisting plan was announced for the Italian luxury goods maker best known for its pebble-soled driving shoes.

Tod's (IT:TOD) stock jumped 17% in Milan following a takeover bid announced Sunday by U.S.-based private equity group L Catterton, which said it would pay EUR43 per share for a 36% stake worth EUR512.3 million ($552.4 million) in the brand.

Catterton is also backed by a massive name in luxury: it became part of LVMH Moet Hennessy Louis Vuitton (FR:MC) and Groupe Arnault, the holding company owned by LVMH Chief Executive Bernard Arnault, in 2016.

Separately, LVMH said it would hold a 10% stake in the group after its delisting. The founding Della Valle family will keep 54% of Tod's shares and control of the new company if the deal goes ahead, but will also tender a 10.54% stake. A delisting of Tod's is due to take place after the bid is complete.

The deal offers a roughly 18% premium to Friday's close of EUR36.36 per share, and a 27% premium to the last six-month average for shares, valuing the company at about EUR1.4 billion, noted Citi analysts Thomas Chauvet and Lorenzo Bracco.

However, given a previous failed delisting attempt in August 2022 by controlling shareholder Diego Della Valle at EUR40 per share, the Citi analysts said the new offer may fall short of enticing minority shareholders.

That's "particularly given evidence of a turnaround at the Tod's brand over the past 12 months and hidden value at Roger Vivier, a niche, high-end footwear brand with EUR287 million in sales and high profitability historically," they said.

But others say those shareholders might be lured in this time, given the Diego Della Valle family's plan to tender a 10.54% stake.

"As such, this together with the currently more uncertain sector backdrop and continued...downside risks to earnings in our view could potentially suggest a higher likelihood for investors to tender," countered a team of analysts at UBS led by Chris Huang.

Shares of Tod's have struggled to recapture ground anywhere near their highs of around EUR145 per share seen in late 2013.

One outcome of another attempt to delist the shoemaker that made its debut on Milan's stock exchange at EUR40 per share is the potential to stir more industry mergers-and-acquisition activity, added Chauvet and Bracco.

"This announcement is a reminder of the challenges faced by small luxury brands and groups in an ever-competitive industry dominated by large multibrand conglomerates (LVMH, Kering, Richemont) and large megabrands (Hermes)," they said.

-Barbara Kollmeyer

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02-12-24 0734ET

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