Shares of Tod’s SpA experienced a significant surge on Monday as the Italian luxury goods maker revealed its plans for delisting. The company is widely recognized for its popular pebble-soled driving shoes.
In Milan, Tod’s stock (TOD) jumped by an impressive 17% following the announcement of a takeover bid by US-based private equity group L Catterton on Sunday. L Catterton intends to acquire a 36% stake in the brand by offering €43 per share, totaling €512.3 million ($552.4 million).
It’s important to note that L Catterton is no ordinary private equity group. In 2016, it became a part of the esteemed LVMH Moet Hennessy Louis Vuitton and Groupe Arnault, which is the holding company privately owned by LVMH Chief Executive Bernard Arnault.
Furthermore, LVMH confirmed that it plans to retain a 10% stake in Tod’s following its delisting. The founding Della Valle family will still maintain a majority share of 54% and control over the new company if the deal successfully goes through. However, they also plan to tender a 10.54% stake. The delisting process will commence after the completion of the bid.
The offer presented by L Catterton presents an enticing premium of approximately 18% compared to Friday’s closing price of €36.36 per share. Additionally, it boasts a 27% premium when compared to the average share price over the past six months. This values Tod’s at an estimated €1.4 billion, according to Citi analysts Thomas Chauvet and Lorenzo Bracco.
It is worth mentioning that a previous attempt to delist Tod’s in August 2022 at €40 per share was unsuccessful for controlling shareholder Diego Della Valle. Given this recent history, the Citi analysts speculate that the new offer may fall short of attracting minority shareholders.
In conclusion, Tod’s SpA has experienced a surge in its stock price due to the announcement of a delisting plan. The takeover bid by L Catterton, with its association with luxury powerhouse LVMH, has generated significant interest in the market. While the offer presents an attractive premium, there is some skepticism surrounding its ability to entice minority shareholders based on the previous failed delisting attempt.
As professional copywriters, we find the latest developments at Tod’s to be particularly intriguing. Over the past 12 months, evidence of a remarkable turnaround at the Tod’s brand and the hidden value of Roger Vivier, a niche, high-end footwear brand with €287 million in sales and a strong history of profitability, have caught the attention of experts.
While some remain skeptical, others believe that this time, shareholders might be enticed by the Diego Della Valle family’s plan to tender a 10.54% stake. In fact, a team of analysts at UBS led by Chris Huang suggests that the current uncertain sector backdrop and the ongoing downside risks to earnings could increase the likelihood of investors tendering their shares.
Unfortunately, shares of Tod’s have struggled to regain their former glory, falling significantly short of their high point at around €145 per share back in late 2013. However, another attempt to delist the shoemaker, which made its debut on Milan’s stock exchange at €40 per share, may have an unforeseen effect by igniting more mergers-and-acquisitions activity within the industry.
As Chauvet and Bracco astutely point out, this announcement serves as a powerful reminder of the challenges faced by small luxury brands and groups in an ever-competitive industry dominated by large multibrand conglomerates such as LVMH, Kering, Richemont, and titans like Hermes.
Tod’s journey continues, and the future holds both excitement and uncertainty for this iconic brand.