Reuters is
reporting that the buyouts shops will find out next week just how large, if any, a stake in the company Cavalli is willing to sell, according to unnamed sources. Among the potential suitors are Candover Investments plc; Carlyle Group; Cinven Ltd. partnering with Italian businessman Maurizio Borletti, CVC Capital Partners; Doughty Hanson & Co.; and TPG Capital. Roberto Cavalli is reportedly looking for bids that value the company at at least $2.20 billion, a multiple of 17 times the company's 2007 Ebitda.
The potential private equity bidders have yet to begin due diligence on the company, so it is not clear if they are just window shoppers unwilling to meet the seller's high price, especially considering the slowing economy in the U.S. and Europe. Buyout shops have been scooping up luxury brands over the past two years including clothing line Valentino, shoemaker Jimmy Choo, lingerie brand Agent Provocateur and yacht maker Bavaria Yachtbau.
However a
story in the Financial Times questions whether private equity firms got in at the top:
Almost as soon as private equity started snapping up luxury assets, the credit crunch unfolded, putting a damper on bonuses in Wall Street and the City of London and generating concern about the strength of the global economy... This could spell trouble for recent investments in the luxury sector, renowned for its strong cyclical nature. It may also make private equity executives think twice about new deals, especially as the credit crunch makes them harder to finance. The credit turmoil already seems to have reduced private equity's appetite for luxury deals, even if it has not disappeared completely. So far this year there have been five deals valued at only $115m, says Dealogic.
And the buyout shops may not be the only ones with reservations about a deal. Although Cavalli has hired Merrill Lynch to select possible bidders to invest in his company, a deal is not a sure thing, as he told an Italian newspaper in March that he did not plan to sell a stake in his company at present. -
George WhiteSee story from ReutersSee related story from the Financial Times
Although Italian fashion designer Roberto Cavalli remains cagey on the possibility of selling his fashion house -- despite hiring Merrill Lynch & Co. to explore the possibility in March -- six private equity firms may have designs on buying into the company.
