Italy’s Zegna presents New York listing in $ 3 billion Spac deal


Italian luxury fashion firm Zegna went public in New York on Monday after partnering with a US special-purpose acquisition company with an estimated enterprise value of $ 3.1 billion.

Spac was started by European private equity group Investindustrial and is chaired by former UBS CEO Sergio Ermotti. His deal with Zegna was first reported by the Financial Times in July and initially valued the combined company at $ 3.2 billion.

“We are very proud to be the first Italian fashion company to be listed in New York,” said Gildo Zegna, the third generation of the family to run the business since its founding in 1910, in an interview with the flagship store. from Zegna to Manhattan on the Friday before registration.

In choppy market conditions, the company rose 8%, to $ 10.96 at the start of the New York session on Monday.

The listing will generate gross proceeds of $ 761 million to invest in Zegna and Thom Browne, another brand it controls. It also opens the door to additional acquisitions. The Zegna family will own an almost 66% stake in the combined company.

There has been a wave of consolidation in the luxury industry. Transactions over the past 12 months include the purchase by LVMH of Tiffany & Co, Etro and Off-White; Kering bought Danish eyewear Lindberg and Richemont acquired the Delvaux leather goods brand.

In 2019, Zegna told the FT that he had no interest in taking the company public. But the pandemic has made it difficult for independent brands to compete with larger, cash-rich fashion conglomerates.

In 2020, Zegna’s sales fell 23% from the previous year to € 1 billion and fell to a net loss of € 45 million, from a profit of € 38 million. In a presentation to investors, the company predicted that its performance would return to near pre-pandemic levels in 2021.

“The luxury market is very difficult,” said Zegna. “We are in competition with conglomerates. [We did it] to become stronger.

“Now I can count on additional resources. . . take our shot if we have another [acquisition] opportunity, and I think I can tell you that we have other opportunities.

Zegna said he was particularly keen to buy more from the company’s suppliers, but would look to other fashion brands as well. “As raw materials become scarce [and] expensive, because there is stress on the supply chain wherever you are, to control [the supply chain] is very, very strategically important, ”he said. If there are opportunities to buy from suppliers, “we will do it,” he added.

The company also wants to focus on the organic growth of its men’s clothing business, which in recent years has shifted from suits to luxury leisure wear as workplaces have become more casual.

Zegna himself no longer wears costumes in interviews; meeting the FT, he wore a heavy cashmere overshirt over a slim polo neck, stretchy knit pants, all in shades of gray, and a pair of Zegna sneakers. “We have transformed the brand perception from a bespoke luxury brand to a luxury sportswear brand. I used to wear a nice suit and tie. . . but once you start wearing this stuff you get hooked.

The company also plans to invest more in its textile business – it supplies fabrics to competitors such as Chanel and Tom Ford – and in Thom Browne, which it bought for $ 500 million in 2018 and has since expanded. clothing for women and children.

Last week it unveiled a new name and logo, removing the name of its founder Ermenegildo from Ermenegildo Zegna.

Gildo, who is 66, said he felt he had to “serve a few more years”.

“The next generation is gaining momentum. I have three good guys in the fourth generation. One is marketing, [my oldest son] Edo. . . Angelo, the youngest, who runs Zegna retail America. . . And then Francesco, my nephew, is responsible for retail in Europe. So who knows?

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