Could Jimmy Choo’s new owner be a familiar face?
Interparfums SA, which holds the Jimmy Choo fragrance license, is said to be working with the Chinese private equity group Hony Capital on a joint bid to acquire the luxury footwear firm.
Other companies said to have made it to the short list of potential bidders are CVC Capital Partners and Michael Kors. WWD reported in May that Kors was pursuing Choo. It would bring the U.S. brand a higher price point and a greater emphasis on footwear.
CVC, which in April completed the purchase of Swiss watchmaker Breitling, declined to comment Monday, while a Kors spokeswoman said, “Michael Kors does not comment on rumors or speculation.”
Market sources indicate that an Interparfums deal could be a strong possibility, as Choo scents have been the fragrance company’s second-best-selling line behind Montblanc, and the acquisition of Choo would put a firm lock on that revenue stream.
It wouldn’t be the first time Interparfums made an acquisition in the fashion space with the aim of bolstering synergies with one of the fragrance brands in its portfolio.
In mid-March 2015, the company said it was acquiring the Rochas fashion and perfume segment from Procter & Gamble Co. for a purchase price of $108 million. The deal marked the maiden voyage into fashion for the Paris-based subsidiary of Interparfums Inc. of New York.
At the time, Philippe Benacin, chairman and chief executive of the Paris-based fragrance group, said the Rochas acquisition would “open up new opportunities” in terms of creativity as well as aesthetic design and marketing choices.
“It will also allow us to apply a global approach to managing a fragrance brand boasting a very high name recognition and without time constraints,” he said.
On Monday, Benacin could not be reached for comment, while Hony declined to comment.
The Choo men’s and women’s fragrances generate nearly one-third of Interparfums SA’s fragrance sales.
In the first quarter of this year, Jimmy Choo’s perfume sales rose 62 percent versus the same prior-year period to 31.6 million euros ($36.4 million). That represented 28.3 percent of the overall fragrance sales at Interparfums, whose other perfume licenses include Coach and Boucheron. Interparfums owns Lanvin’s perfume and cosmetics business.
Interparfums credited Jimmy Choo’s strong gains to solid growth from the label’s original women’s and men’s collections, and also to the introduction of spin-off lines such as Jimmy Choo L’Eau, which generated 5 million euros in revenues, and Jimmy Choo Man Ice, which had sales of 4 million euros.
By Dec. 31, 2016, Interparfums SA’s net cash position had advanced by more than 25 million euros to 160 million euros.
According to speculation by Sky News last week, the price tag on Choo could be up to 800 million pounds ($1.04 billion).
In a report on Monday, Barclays said that figure would value Choo at 13 times the estimated 2017 earnings before interest, taxes, depreciation and amortization.
According to EY’s Luxury and Cosmetics Financial Factbook, the average multiple for luxury transactions in recent years has ranged between 10.4 times and 15 times EBITDA.
On Monday, Jimmy Choo shares closed up 1.3 percent to 1.89 pounds. Interparfums SA stock finished up 3.3 percent to 35.05 euros.
CVC, Hony, Interparfums and Kors are among the businesses expected to make up the first round of bids by the end of July, with a final deal expected this year. It is understood that Investcorp is no longer in the running.
Jimmy Choo, which is on the London Stock Exchange, put itself up for sale in April. The company is part owned by JAB, which has revealed plans to shed its entire luxury division. The other companies in its portfolio include Bally and Belstaff, both of which are looking for buyers.
Both Jimmy Choo and JAB declined to comment on that speculation.
Last month, Jimmy Choo said ahead of its annual general meeting that it has been making “excellent” progress, trading strongly year-to-date, in line with management’s expectations.
It said all categories have shown strong growth in the period, with men’s remaining the star performer. The company said its fragrance business is also performing particularly well.