Puma to Be Spun Off By Kering to its Shareholders

Galtero Lara
Enero 13, 2018

French luxury goods group Kering is to spin off German sports brand Puma to its shareholders as part of plans to transform itself into a pure luxury player. That would permit Kering to focus on its luxury business through brands including Gucci, Balenciaga and Stella McCartney.

Kering first acquired its stake in Puma in 2007 and now owns 86 percent of its shares.

A complete sale of the Puma brand was also on the table, but Kering and Puma made a decision to act differently.

"We are very pleased that Kering has proposed this way to reduce its stake in Puma", said Bjørn Gulden, CEO of PUMA in a statement. “We would be able to carry on to invest in becoming the Fastest Sports Brand in the world, create value for retailers, improve performance for athletes and excite consumers.”.

Kering announced Thursday its plans to distribute 70% of shares of Puma to its investors, which would leave only approximately 16% for the company, confirming a report released earlier by Reuters. "We have laid strong foundations for a bright future for Puma".

The deal comes after a recent turnaround at Puma, which struggled for years following Kering's 5.3 billion euros ($6.4 billion) purchase in 2007. Puma does not fit into that category.

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Its skatewear label Volcom, acquired in 2011 for $608 million, will now also likely be on the block.

"A spin-off was the only way Pinault could participate in the further potential upside of Puma", a person close to the situation said, adding no formal sales process had gotten underway. "A straightforward disposal of Puma at a premium might have been partly priced in by the market".

"The market is disappointed as it wanted an outright Puma sale", a trader said. It has performed particularly well in the United States these past few years, gaining back market share. Puma welcomed this move, adding that it would lead to a 'greater free float of Puma stocks, providing investors an enhances possibility to invest in Puma, and allowing the company to reaffirm its business strategy'.

He also noted that owning a combined 45 percent of Puma, Kering and Artémis will still be supportive of Puma.

"This operation would enable our shareholders to directly benefit from Puma's future value creation". Kering's founder, François Pinault, will allegedly get 29 %.

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