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(Adds details from banking sources, analysts)
By Sarah White and Pamela Barbaglia
PARIS/MILAN, Dec 5 (Reuters) - Shares in high-end puffer
coat maker Moncler surged on Thursday after a report
of potential takeover interest from Gucci-owner Kering
amid a wave of dealmaking in the luxury industry.
Moncler's shares hit record highs in Milan and were up 8.9%
in early trading after Bloomberg reported that the companies had
held exploratory talks about a possible combination or deal.
Kering shares were up by 1% on the Paris stock market.
The two companies declined to comment.
The speculation follows LVMH's $16 billion
takeover of U.S. jeweller Tiffany last month, the
biggest ever acquisition in the luxury sector.
Moncler has become one of the industry's biggest success
stories in the past few years, after a makeover under Italian
entrepreneur Remo Ruffini, who bought it in 2003 and is still
the chief executive. It listed on Milan's bourse six years ago.
The label, worth over 10 billion euros ($11 billion) on the
stock market, has given its jackets a more fashionable twist,
inviting guest designers to dream up more fanciful versions, and
moving away from just functional winter clothing.
Moncler, which derives its name from Monestier-de-Clermont,
a mountain village near Grenoble in France, has benefited from a
fad for high-end streetwear and even dresses movie stars in
quilted dresses on the red carpet. Its coats sell for more than
$1,000.
But analysts and industry insiders have sometimes questioned
whether its model, which is more heavily reliant on a single
product than most rivals, is sustainable in the long run.
That has led to speculation that Ruffini could even be a
buyer and build out his company, or could look to sell.
The businessman, who owns over 22% in the group, had
exploratory contacts with Kering about a potential deal around
the time of its flotation, a source familiar with the matter
said.
But Ruffini has given few indications since that he would be
willing to sell, several people familiar with his thinking said.
BAD FIT FOR KERING
Talk of further luxury bid activity, as companies look to
catch up with LVMH, led to a broader sector rally on Thursday.
Shares in Burberry, Salvatore Ferragamo
and Tod's, some of the standalone brands often cited by
bankers as potential takeover targets, also rose.
Paris-based Kering, which also owns Saint Laurent and
Balenciaga and is run by billionaire Francois-Henri Pinault, is
heavily reliant on Gucci for revenues and profit.
The Italian fashion label has also undergone a spectacular
turnaround, and outperformed most rivals in recent years,
although sales growth is slowing.
Bankers and analysts expect Kering to make a move to balance
out the group through a big acquisition, some questioned the
logic of a Moncler takeover.
The French company would have to pay a large premium to win
such a buzzy brand as Moncler, one banking source said.
"Remo Ruffini and his senior management team have driven the
brand in near perfect manner – taking it to unprecedented
heights. Adding value by acquiring Moncler is therefore not
easy," Bernstein analyst Luca Solca said in a note.
Another banking source said Kering might think twice about
buying more of a lifestyle-type label again, after its purchase
of Puma in 2007 took years to pay off, and sales at the sports
brand only began to pick up at the end of 2014.
Kering spun off the bulk of Puma to its shareholders in 2018
to focus solely on luxury goods.
Like LVMH, branching further into the fast-growing jewellery
would make sense, analysts said, although there are few easy
targets available.
($1 = 0.9073 euros)
(Reporting by Sarah White in Paris, Pamela Barbaglia in London
and Claudia Cristoferi in Milan;
Editing by Sudip Kar-Gupta/Keith Weir/Jane Merriman)
