Ermenegildo Zegna to go public thanks to SPAC deal

In 1910 Ermenegildo Zegna was founded in the foothills of northern Italy as a family-owned manufacturer of woolen fabrics.

On Monday, the company, now a global luxury fashion house that owns the Thom Browne brand, made a big leap into public stock markets – thanks to one of Wall Street’s biggest trends in recent years.

Zegna announced on Monday that it would be listed on the New York Stock Exchange by merging with a publicly traded acquisition fund known as SPAC. The deal is expected to value Zegna at around $ 3.2 billion, including debt, and could pave the way for other private luxury giants to follow suit.

The deal is also the latest sign that big luxury fashion firms are gearing up to get even bigger, seeing an opportunity to take control of their rivals and grow into empires. This is a trend that may have been exemplified by LVMH Moët Hennessy Louis Vuitton, the fashion empire which in recent years has made deals to buy Tiffany & Company.

These takeovers have skyrocketed in recent years, with rivals across the ocean with similar empire-building ambitions. Capri Holdings, formerly known as Michael Kors Holdings, acquired Italian fashion house Versace for $ 2.1 billion in 2018, while Tapestry, formerly known as Coach, bought companies such as Kate Spade and Stuart Weitzman.

The luxury industry has been resilient as consumers have continued to spend on jewelry, clothing and other indulgences, including as the global economy slowly emerges from a pandemic. Shares of LVMH, whose brands include Dior, Stella McCartney and Fenty, have risen more than 60% this year; those of Kering, the parent company of labels like Gucci and Saint Laurent, are up 45%.

For much of its existence, Zegna was primarily known as a leading manufacturer of men’s clothing fabrics and, later, costumes. (He still does costumes for other high-end labels, including Tom ford.) But with its 2018 buyout of a majority stake in fashion brand Thom Browne, Zegna launched its own ambitious plan to become a stable of luxury brands.

Zegna now operates nearly 300 stores in 80 countries. And in a sign of optimism about the revival of consumer spending in fashion, the company expects its sales this year to approach pre-pandemic levels.

While Zegna’s pursuit of more resources to develop isn’t new, the way she does it is.

It is merging with a SPAC – officially known as a Special Purpose Acquisition Company – a fund that is raised on the stock markets solely for the purpose of merging with a private company and listing it on the stock exchange.

“We will continue to invest in creativity, innovation, talent and technology in order to maintain Zegna’s leading position in the global luxury market,” said Ermenegildo Zegna, CEO of the company and small- son of its founder, in a press release.

These funds have exploded in popularity over the past two years to allow companies to join the stock markets faster than through a traditional initial public offering. (PSPCs are increasingly monitored by regulators in the United States, where most of these funds are listed.)

Merge with Zegna is a fund managed by Investindustrial, a European investment company. The deal will give Zegna about $ 880 million in new money while allowing her founding family to retain a stake of about 62 percent.

“Our goal is now to support Zegna in this important new chapter in its history while opening up the possibility for the public to invest in one of the last major iconic independent luxury brands”, said Sergio Ermotti, President of Investindustrial SPAC, in a press release. declaration.

The transaction is expected to close by the end of the year, subject to the approval of the SAVS shareholders.

Vanessa Friedman contributed reports.


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