PPR to Take Over Puma
April 10, 2007
The French PPR SA, short for Pinault-Printemps-Redoute, said in a statement it has agreed to buy a 27.1-percent stake from Mayfair, the Herz family investment group that currently owns Puma AG.
"Following this acquisition, PPR intends to launch a friendly takeover in cash on the remaining outstanding Puma shares at the price of 330 euros per share," according to a statement released on the company website on Tuesday.
With over 17 million shares in issue, the takeover bid values the German sportswear fashion company at 5.7 billion euros ($7.6 billion). PPR is offering 5.3 billion euros for Puma, the world's third-largest producer of sportswear after US-based Nike and German rival Adidas.
Teaming up against industry giants
Puma reported sales of $2.37 billion in 2006 and is upbeat about the prospect for this year, making it a good choice for investors who are otherwise unable to penetrate a market dominated by industry giants Nike and Adidas.
In its own statement, Puma's management welcomed the acquisition as well as the planned friendly takeover bid, saying that Puma stands to benefit from "the support of a financially strong and leading international company."
PPR is a Paris-based investment group in the market for top-end fashion goods. It fully owns Gucci and Yves Saint Laurent -- huge names in the business -- and holds majority stakes in various other luxury brands. In addition, the group owns a distribution branch that includes Fnac, a leading retail chain in France.
Puma "will also benefit from PPR's global positioning, strong portfolio of premium brands and expertise in the retail business," Puma's statement reads. In a preliminary assessment, the board of management called the offer price of 330 euros per share "fair."
Early rumors raise stock price
PPR chief executive Francois-Henri Pinault said no job cuts were planned as part of the takeover.
"In the context of the planned transaction there will be no changes with regard to staffing," he told AFP news service.
Citing sources close to the matter, The Wall Street Journal had reported on Friday that PPR was negotiating the initial stock purchase with two members of the Herz family. The business daily also said that PPR was considering a takeover. Neither company would comment at the time, but the rumors saw Puma shares surge on the Frankfurt stock exchange.