Friday, 9 February 2018

China’s Fosun and Qatar’s Mayhoola in pole position for the acquisition of LANVIN

China’s Fosun International and Qatar’s Mayhoola, which owns Valentino and Balmain, are competing to  buy control as Lanvin is set to run out of cash as early as March, according to FashionNetwork.com

The news emerges shortly after Alber Elbaz, Lanvin’s acclaimed designer for over a decade, won a record 10 million euro claim for a Paris-based creative director against the house, the oldest couture marque in France.

Luxury giants LVMH and Kering expressed interest when Lanvin was auctioned last fall but walked away, they added. Currently, Mayhoola is looking as “the most motivated” but a deal has not been signed yet, several sources said on condition of anonymity. “It is a very complicated case but things will have to move relatively quickly in light of Lanvin’s financial situation,” one of the sources said.

Sales at Lanvin have more than halved in the past three years to less than 100 million euros as the French fashion house struggled to reinvent itself under two successive designers; in a desperate attempt to find the right strategy after sacking its star designer Alber Elbaz in 2015.

Elbaz did not win a claim that he suffered a prejudice from having lost out on an opportunity to sell his stake to Mayhoola before he was ousted when he said that an indicative offer of more than 400 million-euro-offer was on the table.

Elbaz borrowed money from Lanvin’s controlling shareholder, Chinese media magnate Shaw-Lan Wang based in Taiwan, to purchase shares and had amassed a stake of around 20 percent in a unit that indirectly controls Lanvin. It is not clear whether Elbaz still has a sizeable indirect minority stake in Lanvin since there remained unsettled debts between him and Mrs Wang after he left. Elbaz was ousted by Mrs Wang after a violent row during a boardroom meeting, several sources said. Lanvin and Elbaz declined to comment.

As of December 15, Lanvin disposed of a little over 15 million euros to pay salaries and suppliers until the end of February-early March, several sources said. The company’s consolidated sales have gone from 206.7 million euros in 2014 to 97 million euros in 2017 and it has racked up losses totalling 27 million euros. Lanvin started losing money in 2016. Last year, auditors filed a warning to a Paris commercial court about the company’s troubled finances. To save money, Lanvin cancelled its show at Paris Fashion Week scheduled for February 28 and replaced it by a presentation, the French Couture and Fashion Federation confirmed this week.

Kering and Mayhoola declined comment while LVMH did not immediately respond to requests for comment nor did Fosun International, a group controlled by Chinese billionaire Guo Guangchang. Fosun has invested in businesses ranging from French holiday operator Club Med to jeweller Folli Follie and knitwear band St. John in the United States.

If Mayhoola wins the bid for Lanvin, it will face the delicate task of recruiting the right chief executive and designer who can together craft a new creative vision for Lanvin. Industry observers estimate Lanvin will need least 100 million euros to buy back licences, expand operations, renovate shops and develop a proper leather goods line.

Any new owner of Lanvin would to need to find around 20 million euros to buy back of its license from Japan’s Itochu trading group as it has come up for renewal on Dec.31 2017, several sources sad.  Mayhoola would also be interested in buying back Lanvin’s perfume licence, which Mrs Wang sold to Interparfums in 2007 and which ends in 2025.

Swiss-German investor Ralph Bartel, which owns a 25 percent stake in Lanvin and has invested several dozens of millions of euros since 2010, has said he wished to remain on board to try to recoup his investment in the longer term, according to several sources close to the matter.

Mrs Wang’s refusal to significantly invest in Lanvin’s growth has prompted the departure of several highly regarded chief executives, with the last one being Thierry Andretta, who left in 2013 and now runs London’s Mulberry fashion company. Last year, Mrs Wang brought back as manager her friend Nicolas Druz, a journalist who created a newspaper for Chinese expatriates in Paris in the 1990s. In July, Mrs Wang parted ways with designer Bouchra Jarrar after just two seasons and appointed Olivier Lapidus, whose first collection presented last fall failed to impress buyers and the press.

The Qataris have been eyeing Lanvin for more than a decade. Back in 2008, when the company just started to return to profitability, they had made a bid that valued it at around 150 million euros.  Today, Mayhoola, which has close ties to the Qatari royal family, is sitting on a potential profit well in excess of 1.5 billion euros on its investment in Valentino.

The Italian fashion brand whose sales have grown beyond the psychologically important 1 billion-euro-mark is considering a flotation that would value it at more than 2.5 billion euros. Mayhoola bought Valentino in 2012 from private equity firm Permira for around 700 million euros.

Lanvin Spring Summer 2018

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