After 25 years on the Milan stock exchange, the Italian family that owns Benetton is taking the company private. In a deal that was expected to close March 30, the family is buying out the 25% of shares they don’t already own for 210 million euros.
A
Financial Times
report
noted that the family, led by 76-year-old founder Luciano Benetton and his three siblings, believes the move “is the only way to undertake the profound turnaround needed to make [Benetton] successful again.”
The article pointed out that in the past decade, Benetton has been overtaken by “younger, nimbler brands” such as Zara and H&M. The
FT
report also said that Benetton has an “outmoded business model,” with 75% of its revenues built around franchises. About half its sales come from Italy, where retail sales have suffered because of the sovereign debt crisis.
The Benetton family’s holding company, Edizione, also has interests in airports, banks and media, the article said.
According to the
FT
report, company insiders say the delisting “reflects a decision by the founding family members to give control over strategy” to Alessandro Benneton, 48, Luciano’s eldest son. The article noted that this move “is the best bet to make the bridge from the founding generation to outside management, get the company to compete against newer rivals and placate family tensions.”
It remains to be seen whether [Alessandro] Benetton, who is “in awe” of his father, according to a person close to the family, is tough enough to make the bold changes in product and strategy to revive the brand.
The
FT
article noted that Alessandro, who has a Harvard MBA, set up his own private equity firm before joining Benetton in 2007. The report said that if he fails to turn the company around, his background “would prove an advantage in a break-up of the group.” (Source:
Financial Times,
March 24-25, 2012.)
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