Fashion Law JournalIntroduction
Mergers and Acquisitions are a big part of business. They are done for many purposes, such as diversification of operations or products, to increase the financial capacity of a company or to acquire certain assets, to increase the revenue of a company, and so on. A merger or acquisition may even go through due to reasons that may be entirely unrelated to business or company affairs such as the personal preference of top management and so on.
Whatever the reason, it cannot be denied that mergers and acquisitions are a frequent occurrence when it comes to business. This is no different in the fashion world, where mergers and acquisitions happen frequently. When it involves luxury fashion companies, the merger or acquisition becomes even more noticeable.
In 2020 and 2021, some mergers and/or acquisitions have taken place in the world of luxury fashion that got tongues from all walks of life wagging. Some of these M&A transactions are explained below:
Recent Luxury Fashion Mergers and Acquisitions
- Chanel and Paima
The most recent luxury restructuring a company has gone through is the acquisition of a sizable stake in Paima by Chanel. This happened on the 24th of August, 2021[1].
Paima is an Italian knitwear company that serves as a manufacturer for the luxury fashion industry, employing over 200 employees. It was established in Osimo, a small town in the Marche region of Italy by the Marabini family in 1968 as a small knitwear atelier. It has grown a lot since then, and its last public filing in 2019 put the company’s revenue at €30 million.
Chanel acquired the majority stake in the Italian company after more than two decades of partnership[2], a move that seemed to signal the fashion giant’s desire to have more control over its manufacturing processes and supply chains.
Chanel also seems to want to continue this trend, as their chief financial officer Philippe Blondiaux confirmed. “We are looking for new and sustainable materials,” he said in an interview[3]. “Whether it’s for leather, cashmere or in different areas, and we will make a statement when we have something that is scalable, and that can be industrialized.”
The company may showcase the first results of this new partnership at its next Métiers d’Art collection in Paris on December 7th, 2021.
2. Authentic and Reebok
Authentic Brands has acquired Reebok from the German sportswear giant Adidas for €2.1 billion. The deal was finalized on the 12th of August, 2021[4].
Adidas acquired Reebok in 2005 for $3.8 billion as part of its plans to compete with its great American competitor Nike on their home turf. However, it has been generally agreed that the acquisition failed to live up to its potential, and Reebok was earmarked for sale in 2019[5].
Authentic Brands, a New York-based brand that also owns Forever 21, Brooks Brothers, and Eddie Bauer, acquired Reebok in mid-August, hoping to revive the sportswear brand.
3. LVMH and Pucci
LVMH Moët Hennessy Louis Vuitton is the most valuable company in Europe, with a valuation of €329 billion. The luxury company earned this title partly through its acquisitions and control of prestigious brands, including well-known fashion brands like Louis Vuitton, Fenty, Christian Dior, Givenchy, Marc Jacobs, and Bulgari[6].
In keeping with this style, LVMH recently took full control of Italian fashion house Emilio Pucci, acquiring the remaining 33% of the stake still held by the family after buying a 67% stake in 2000[7].
This means that LVMH will now have full control over the management of the company, and it is for this reason that some of its top management, including Laudomia Pucci, the founder’s daughter, has stepped down.
4. Exor and Louboutin
Exor is an investment group incorporated in the Netherlands and run by the well-known Agnelli family in Italy. It is the largest shareholder in the Italian automobile company Ferrari. It has made several moves in the fashion world, including some M&A transactions.
It recently made the most high profile of them by taking a 24 percent stake in the Paris-based brand known for its iconic red-bottomed heels. The acquisition of that stake cost about $640 million[8].
This benefits both brands, as it gives Exor leverage in the fashion industry, helping to diversify its portfolio, and it may represent an opportunity for Louboutin’s expansion into China, particularly with Exor’s acquisition of Chinese brand Shang Xia just months before.[9].
5. LVMH and Tiffany & Co.
The biggest M&A deal in the luxury fashion world happened in late 2020, with a $15.8 billion acquisition of U.S. jeweller Tiffany & Co. by conglomerate LVMH[10].
The deal was not without its drama, as the COVID-19 pandemic put the potential merger in danger of not going through. The whole thing devolved into an acrimonious and public war of words, and even a lawsuit.
However, the acquisition, $425 million less than the original agreement, finally went through.
It is a statement by LVMH showing that it intends to bolster the smallest aspect of LVMH’s business – the jewellery and watch division.
Conclusion
The above list is only but a small part of the whirlwind of M&A transactions that have taken place in the world of luxury fashion over the past year. As the world recovers from the pandemic and companies seek to consolidate and secure their businesses, a lot more of these mergers and acquisitions will take place. This heralds an interesting period for the fashion world. It will be exciting to see what direction in which these mergers will take the industry.
[1] FashionNetwork.com US. (2020, August 25). Chanel acquires Italian knitwear business Paima. FashionNetwork.Com. https://us.fashionnetwork.com/news/Chanel-acquires-italian-knitwear-business-paima,1327909.html
[2] Fraser, K. (2021, August 24). Chanel acquires stake in Paima. FashionUnited. https://fashionunited.uk/news/fashion/chanel-acquires-stake-in-paima/2021082457334
[3] Diderich, J. (n.d.). Chanel Revenues Up Double Digits in H1 2021 After 18% Drop in 2020. WWD. Retrieved August 30, 2021, from https://wwd.com/business-news/financial/chanel-sales-operating-profit-2020-1234845537/
[4] Hirsch, L. (2021, August 12). Adidas Sells Reebok to Authentic Brands for $2.5 Billion. The New York Times. https://www.google.com/amp/s/www.nytimes.com/2021/08/12/business/adidas-reebok-authentic-brands.amp.html
[5] Repko, M. (2021, August 12). Adidas strikes deal to sell off struggling Reebok to Authentic Brands Group. CNBC. https://www.google.com/amp/s/www.cnbc.com/amp/2021/08/12/adidas-strikes-deal-to-sell-reebok-to-authentic-brands-group.html
[6] Davis, D. (2020, February 4). Sephora is opening 100 new stores across the country this year — here are 17 of the most iconic brands owned by its parent company, French luxury giant LVMH. Business Insider Nederland. https://www.businessinsider.com/lvmh-brands-iconic-luxury-goods-bernard-arnault-2019-10%3famp
[7] Navas, J. (2021, June 18). LVMH Acquires Emilio Pucci. CR Fashion Book. https://www.crfashionbook.com/fashion/a36766407/lvmh-acquires-emilio-pucci/
[8] T. (2021, April 4). Ferrari Owner Exor Takes 24% Stake in Louboutin, Valuing the Footwear Company at $2.73 Billion. The Fashion Law. https://www.thefashionlaw.com/ferrari-owner-exor-takes-24-stake-in-louboutin-valuing-the-footwear-company-at-2-73-billion/
[9] 顾. (2020, December 16). Hermes, Exor sign agreement on Shang Xia. Chinadaily.Com.Cn. https://www.chinadaily.com.cn/a/202012/16/WS5fd9a8f9a31024ad0ba9c310.html
[10] Snider, M. U. T. (2020, October 29). Tiffany agrees to a $15.8 billion revised sale price, merger with LVMH, owner of Louis Vuitton, Sephora and Hennessy. USA TODAY. https://www.google.com/amp/s/amp.usatoday.csom/amp/6067232002
Author: 
A writer, a freelancer, an Intellectual Property Law enthusiast, and a recent graduate from the Faculty of Law, University of Ilorin, Precious Oluwatobi Emmanuel is known for wearing a lot of hats. He has written agreements and documents for newly established businesses, to writing articles for websites online. Precious Oluwatobi Emmanuel is a recent alum of the University of Ilorin, Ilorin, where he will receive a Bachelor of Laws by October. He developed an interest in Intellectual Property Law when he wrote a story, and showed it to someone, and then saw it posted online with the person credited as author. This event made him want to know what protections were available in situations like that. Once he started on the path of Intellectual Property Law, it became his favourite aspect of law.
Appreciate it for helping out, good information.