Jan 20, 2017
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Safilo shares drop after LVMH/Marcolin deal

Jan 20, 2017

Shares in Italian eyewear maker Safilo fell more than 15 percent on Thursday after reports surfaced that French luxury group LVMH was set to take a 10% interest in unlisted Italian spectacle competitor Marcolin.

A recent shifting of tectonic plates in the eyewear sector has investors wondering if Safilo can hold onto licenses such as Céline.

Shares of Safilo Group SpA, which holds a number of license agreements with LVMH, fell 15 percent to 6.75 euros on the Milan stock market at the closing bell, earlier dropping a whole 21 percent in the day, the biggest dive since 2014. Safilo shares closed at 6.69 euro at the end of the trading day on Friday.

Investors saw the impending move as a warning sign that Safilo Group SpA could stand to lose some of its lucrative business with LVMH. The Italian eyewear specialist currently holds licenses for some of the French group’s flagship brands, such as Fendi, Givenchy and Celine, the latter of which will expire this year. Safilo also recently renewed the license with LVMH’s star label Dior until the end of 2020.

Reports yesterday said LVMH’s sudden interest in Marcolin was a direct response to the 46 billion euro ($49 billion) merger between Italian Luxottica Group SpA and French Essilor International SA announced earlier this week, and could even be an effort on the part of LVMH to control the manufacturing of its own eyewear.

Speculation in the financial press discussed the possibility that LVMH might also invest in Marcolin’s Italian manufacturing operations, or create a new company that could eventually absorb all of the French luxury group’s eyewear licenses.

Bloomberg said the stake sale of Marcolin could elevate the Italian manufacturer’s valuation to as much as 500 million euros ($531 million). That would be a steep rise following its 2012 valuation at 282 million euros after buyout firm PAI Partners purchased an 80 percent stake in the company. Marcolin’s licensing portfolio currently includes the manufacture of sunglasses for Tod’s and Diesel.

($1 = 0.9434 euros)


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