Tod’s, all the slopes of the American Tabor bottom in Della Valle
The Tabor hedge fund criticizes (again) the moves of the Tod's group, led by Diego Della Valle and owner of the Tod's, Roger Vivier, Hogan and Fay brands. Here's why, what happened previously and how the luxury sector has changed
Is Tod's selling off its shares? For the American fund Tabor Asset Management, which holds 1.1% of the group's ordinary shares, yes.
In fact, the investor believes that, in the context of the public purchase offer (OPA) on all the shares of the company listed on Euronext Milan and led by Diego Della Valle, the value per share should be at least double.
Tabor had already questioned the first takeover bid of fall 2022.
TOD'S LATEST IPO
The voluntary total takeover bid for Tod's shares, announced on 10 February and launched on 22 March by Crown BidCo (for the L Catterton fund), will end on 8 May 2024. As of yesterday, as reported by Teleborsa , 3,666 bids had been submitted membership requests, "therefore, overall membership requests are at 4,766, equal to 0.051% of the offer".
Borsa Italiana also reminds you that Tod's ordinary shares purchased on the market on 7 and 8 May 2024 cannot be tendered to the offer.
WHAT TABOR DOESN'T LIKE
However, Tabor, a New York-based fund that owns 1.1% of the ordinary shares of the Tod's group, has (again) lashed out against the operation. And he did so with a letter whose subject is: “A fair deal for ALL Tod's shareholders”.
The letter asks "the board of directors of Tod's to protect minority investors and Crown BidCo to improve the terms of the offer, including by increasing the price". The criticism concerns the offer price per ordinary share of 43 euros which, for Tabor, should instead be at least double, if not more. In fact, his proposal ranges from 82 to 102 euros.
The fund then invites "shareholders to reconsider the possibility of accepting the offer at the current price" as it "undervalues Tod's and the individual brands of the group", namely Tod's, Roger Vivier, Hogan and Fay.
THE COMPARISON WITH THE PREVIOUS
“As in the case of the failed 2022 tender offer of DeVa finance, an insider group of majority owners, which includes CEO and President Diego Della Valle, is working with LVMH and its allies, acting indirectly through Crown BidCo, to take advantage of the current macroeconomic environment that is putting pressure on share prices of companies across the luxury sector, giving minority shareholders little choice but to participate in an inadequately priced transaction,” the letter reads .
The reference is to the takeover bid launched by DeVa Finance in August 2022 and then withdrawn in December of the same year due to insufficient participation. During that attempt, the price offered was 40 euros and, for the same reasons as today, Tabor was against it.
WHAT HAS CHANGED
However, today's public offering context “is significantly different from that of two years ago,” notes Affari Italiani . And not only for the price offered, which has risen from 40 to 43 euros.
“While in the past there was a large amount of shares available on the market, now the availability is very limited – states the article -. The L Catterton fund, in collaboration with the della Valle family who promoted the takeover bid, has in fact purchased a significant percentage of Tod's capital in recent weeks, already reaching approximately 8% of the capital compared to the announcement of the "The operation took place in mid-February."
Furthermore, Affari Italiani points out, "in accordance with the previously established agreements, the Della Valle family (which owns 64.5% of the group) has declared that it does not wish to participate in the public purchase offer with more than 54% of the shares . Likewise, Delphine of Bernard Arnault's LVMH group, already a minority shareholder of Tod's, will maintain her 10% share, confirming her commitment to supporting the Italian family."
Il Sole 24 Ore underlines how the context has changed: “Finally, we would like to remind you that the takeover bid at 43 euros indicates an overall valuation equal to 27 times the 2023 profit of the Tod's group and 1.32 times the net book equity. If it is true that luxury multiples have also been (much) higher, it is equally true – regardless of what Tabor writes about it – that the current macroeconomic scenario and that of the sector itself is one of great, difficult to measure, uncertainty".
Just think of the recent collapse of Kering caused by Gucci, which also dragged the other luxury big names along with it.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/tods-tutte-le-scarpate-del-fondo-americano-tabor-a-della-valle/ on Wed, 27 Mar 2024 10:47:30 +0000.