* HSBC, Morgan Stanley say buyout offer is fair
* Most analysts don't expect offer to be raised
* Benetton says will invest in stores, Asia eyed
By Michel Rose
MILAN, March 3 The Benetton family is
likely to succeed in buying out minority shareholders and
delisting the retailer after financial advisers said their offer
was fair, but turning around the struggling Italian company will
Both Morgan Stanley, which advises board directors, and
HSBC's fairness opinion for independent board members said the
4.6 euros per share offered by the Benettons' Edizione holding
last month was fair, according to the prospectus posted on
Benetton's website on Saturday.
Out of eight analysts asked by Reuters, only three expected
the Benettons to raise their offer, while five saw no reason to
sweeten the deal considering the historically low share price at
which Benetton is now trading, after a decade of stagnating
sales and in a crisis-hit Italian stock market.
Shares in Benetton, famous for its brightly
coloured wool sweaters, have hovered just above the 4.6 euros
offered since the bid was made public at the beginning of
February, and last traded at 4.646 euros.
The fairness opinion report by HSBC had been much
anticipated by analysts, who said a rebuff of the offer -- a 6
percent premium to the average price of the last 12 months --
could have lured activist, foreign investors.
With no shareholder owning more than 2 percent, the offer is
now likely to meet little resistance.
It would represent a better deal for the Benetton family
however, which would pay up to 277 million euros to gain full
control of a group whose market value has shrivelled 40 percent
in 2011 to about 850 million euros, a far cry from the 4 billion
euros reached in 2000.
But after a quarter of a century on the Milan stock
exchange, the delisting marks the end of a tough decade for the
retailer, which was hard-hit by the emergence of more-flexible
rivals such as Inditex's Zara and Sweden's H&M
CUT EUROPE EXPOSURE
Between 2000 and 2010, Benetton's revenues have remained
almost unchanged, around 2 billion euros. By comparison, sales
at its Spanish rival Inditex have increased almost fivefold in
the meantime, to 12.5 billion euros.
Because even though its controversial advertising campaigns
made the group famous the world over, it has failed to cut its
exposure to slow-growing European markets over the last 10
Nearly half of its sales comes from Italy, where consumers
are feeling the pinch of euro zone debt crisis. It is now
growing in India, but has failed to spread in China.
"What is striking with Benetton is their poor performance in
Asia so far, compared to other Italian retailers," a Hong Kong
based analyst said.
"Made in Italy" brands have a huge export potential with
cash-rich and status-seeking consumers in Asia, it's
incomprehensible that Benetton is not benefiting from this
theme," the analyst said.
"Management must not have been paying attention to
developments in the global consumer market for the last 10
In the prospectus disclosed on Saturday, Benetton said the
delisting will give management greater flexibility in the short-
to medium-term to restructure the group without the market's
The group will invest heavily in its real-estate portfolio,
opening new stores in prime locations to raise its visibility in
strategic markets, the document said, using the group's
cash-flow and credit lines.
"However, we cannot rule out that this strategy will have a
negative impact on profitability and the financial profile of
the group in the short-term," it added.
The buyout offer, which was approved by market regulator
Consob on Friday, runs from March 5 to March 30.
Benetton appointed Morgan Stanley as financial adviser and
Gianni, Origoni, Grippo, Cappelli & Partners as legal advisers.