Buccellati seeks new backer after Chinese owners pull the plug – sources
today Nov 20, 2018
Buccellati, one of Italy’s last high-end independent jewelers, is actively seeking a buyer after its new Chinese owners pulled the plug on a 200-million-euro expansion plan, several sources close to the matter told FashionNetwork.com on condition of anonymity.
China’s Gangsu Gangtai Holdings, a major jewelry distributor and gold mine-owner, has run into financial difficulties and troubles with Beijing in the past six months. And as a result, it can no longer transfer funds out of China to finance Buccellati’s production, marketing and plans to open 88 boutiques as announced when it bought an 85-percent stake in the Milanese jeweler in 2016.
“Gangtai does not have the resources anymore to continue supporting Buccellati’s development,” one of the sources with first-hand knowledge of the matter said. “It has become more and more difficult to export money from China.”
Gangtai has fallen foul of a Chinese government crackdown on credit to the real estate industry and is now forced to sell prized assets to pay down debt. It has already disposed of a major real estate project in China this summer. In September, Gangtai could not meet the outpayment on a 500-million-yuan corporate bond maturing in 2019, adding to the number of corporate bond defaults in China as the country’s economy slows and concerns grow about an intensifying trade war with the United States.
“The government is not letting money out on certain M&A deals like this one,” one of the sources said. “You have a totalitarian government, so there is nothing that can be done about it.”
Gangtai is facing the unpalatable prospect of having to sell Buccellati at a much lower price than the 230 million euros at which the 2016 deal valued its equity. Considering Buccellati is estimated to generate revenue of around 50 million euros a year and to be sitting on a similar amount in unsold stock, the value of the company, just about breaking even financially, is likely to reach no more than 150 million euros, several sources close to the matter argued.
The best-positioned bidder for Buccellati would be Cartier-owner Richemont, which has already expressed interest in the brand and looked at its books, according to two sources. But negotiations with Gangtai have been arduous and it is not clear whether a deal will be struck.
Other potential suitors include Qatar’s well-heeled Mayhoola, which owns Valentino and Balmain, but it would not enjoy the same synergies as Richemont in terms of distribution and marketing since the Swiss group owns jewelers Piaget, Van Cleef & Arpels and Montblanc.
Founded just under a century ago in 1919, Buccellati is a long-time favorite among royalties and high-class connoisseurs and one of those rare Italian jewelers that have managed to preserve a clearly identifiable style and craftsmanship. Best-known for its honeycomb fine lace 4,000-euro rings and 20,000-euro golden brushed bracelets, Buccellati uses distinctive engraving techniques that date back to Renaissance-era traditions.
In spite of its strong heritage, Buccellati, like many luxury Italian family-controlled businesses, has suffered from family feuds, the lack of a clear long-term growth strategy and insufficient investments in new markets such as Asia. In fact, the Milan jeweler has been looking for a good home for nearly a decade now. It had already been on the market for many years before it was acquired by Italian private equity fund Clessidra in 2013, which hired ex-Lanvin CEO Thierry Andretta (now leading British fashion brand Mulberry) to run the company. After Clessidra’s main partner and driving force, Claudio Sposito, died in a matter of weeks due to a rare form of cancer in early 2016, control of the private equity firm was sold to Italmobiliare SpA, a publicly listed industrial group controlled by the billionaire Pesenti family. Buccellati was put up for sale again and a deal was signed with Gangtai Holdings at the end of the summer in 2016. Clessidra and the Buccellati family together still own 15 percent of the Milanese jeweler.
Clessidra is also looking for a buyer for Roberto Cavalli, which is losing money, and which generates annual revenue of around 150 million euros a year. Several sources said Philipp Plein had looked at the Italian but did not make a firm offer. Cavalli is headed by Gian Giacomo Ferraris, who joined the brand in July 2016 after running Versace (now owned by Michael Kors) for several years.
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