Italy’s Tod’s SpA (IT:TOD) has struck a takeover deal with L Catterton, following which the luxury shoemaker will delist from the Milan bourse and go private. Tod’s management has been vying to take the company private for years to avoid the regulations and hassles of being a publicly listed company and to get more liberty to operate. Della Valle, Tod’s founding family that owns 64.5% of TOD, and LVMH (FR:MC) founder L Catterton, who holds 3.8% of Tod’s shares, have agreed to a €1.4 billion valuation for Tod’s. TOD shares surged 18.4% yesterday on the news.
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Tod’s SpA manufactures and sells designer shoes, leather goods, and clothing under the brands Tod’s, Hogan, Fay, and Roger Vivier. TOD shares have gained over 22% in the past year, including yesterday’s surge.
Details About the Deal
Tod’s has entered the deal with special purpose vehicle Crown Bidco Srl, backed by a private equity fund affiliated with L Catterton Management Ltd. Per the terms, Crown Bidco will offer to buy 36% of Tod’s or nearly 13 million shares for €43 per share or about €512 million. This will lead to Tod’s delisting from the Milan stock exchange. The other option is to merge the companies in case the delisting plan fails. The offer represents an 18% premium to Tod’s closing share price on February 9.
Following the delisting, Tod’s current majority shareholders, the Della Valle brothers, will hold 54% of the company. Further, L Catterton will own 36% of Tod’s while LVMH will keep a 10% share.
This is the Della Valle brothers’ second attempt at delisting Tod’s. In 2022, the family had offered to take over the remaining shares at €40 per share, but the deal failed due to a minimum threshold requirement.
Is Tod’s Stock a Good Buy?
Following the takeover news, Citi analyst Thomas Chauvet reiterated a Hold rating on TOD shares with a price target of €35 (18.6% downside).
Chauvet is cautious that the other shareholders may not fully appreciate the offer price as it undervalues the turnaround at Tod’s and the value of the Roger Vivier brand. Importantly, the offer price of €43 is only 7.5% higher than the 2022 bid of €40 per share, which may not go well with the minority shareholders.
With seven Holds and one Sell recommendation, TOD stock has a Hold consensus rating on TipRanks. The Tod’s SpA share price forecast of €34.75 implies 19.2% downside potential from current levels.
