Italian luxury fashion group Ermenegildo Zegna has agreed to merge and go public with a US special purpose acquisition company. The transaction brings the company’s corporate value to US$3.2 billion and reverses the consolidation trend that has swept the luxury industry.
Zegna is a family business since its establishment in 1910. space Initiated by Investindustrial, a European private equity group, it is chaired by Sergio Ermotti, the former CEO of UBS.
Part of the funds raised will be used to help Zegna invest in its menswear business, and give it firepower to find other brands to acquire. Its $500 million acquisition American luxury brand Thom Browne in 2018.
Gildo Zegna, the 65-year-old chief executive, told the Financial Times: “We could have been independent for another 100 years. But the timing was right, the world has changed a lot, and luxury goods have become very challenging. Sex.”
Zegna, Who was interviewed before the pandemic Zeng said that he was not interested in making the business public, and added: “The opportunity has come and we have seized the opportunity. Scale is becoming more and more important… With the right partners… If they show up, we can catch them. Doing a great job in taking up new opportunities.”
The decision to go public is in stark contrast to the path of many independent, family-owned luxury brands—even before the pandemic wreaks havoc on the industry—to larger conglomerates or private investors.
The family-run Italian luxury brand Etro will become the latest brand to follow this trend on Monday, and it is expected that the brand will confirm the sale of a majority stake in its business valued at 500 million euros to LVMH-backed private equity group L Catterton.
According to the terms of the Zegna transaction, the family will sell some of its shares and retain 62% of the combined company. The company’s equity is valued at US$2.5 billion.
The proceeds include approximately $400 million raised last year by Investindustrial Acquisition Corp (the New York-listed entity that Zegna will merge with) and $250 million from private investors who declined to be named.
After the transaction is completed, Investindustrial, an investment company run by Andrea Bonomi, will provide another $225 million. Bonomi himself is the heir to an Italian industrial family. Since January, after months of negotiations, he has been wooing Zegna, hoping to reach an agreement.
The investment in Zegna will enable Investindustrial to acquire 11% of the company’s shares, as well as the shares acquired as a Spac sponsor. Investindustrial has promised to lock up the shares acquired through its investment for three years.
Zegna was founded in the northern Italian town of Treviso by Ermenegildo, Gildo’s grandfather, as a luxury textile supplier.
The company has been known for its exquisite men’s suits since the 1960s, and was one of the first luxury goods groups to enter China in 1991. It has established brand awareness very early and, importantly, in the largest market at present Established a strong relationship with the owner.
In recent years, as the demand for men’s suits has declined, the company has shifted its focus to what Gildo Zegna calls “high-end leisure” and invested in its “from sheep to shopping” supply chain, while other companies have sold factories to specialize in Focus on design, marketing and sales.
Since the acquisition of Thom Browne, Zegna told the Financial Times that the group has further promoted the brand to the high-end market, and sales have doubled. Zegna, with more than 6,000 employees, also has close ties with Chanel, Tom Ford and Gucci to provide fabrics for them.
Gildo’s cousin Paolo, sister Anna and two sons Edoardo and Angelo also work for the company. When asked whether the decision to list its shares meant that executives outside the Zegna family might eventually succeed Gildo, Bonomi replied that the next CEO to become Zegna is “the right thing,” but it will It boils down to merit.