* To offer 35 euros a share
* Deal will leave around 31.5 pct free float remaining
* Offer "could put a floor" under share price - analyst
(Adds details, background, byline)
By Lionel Laurent and Marcel Michelson
PARIS, April 15 French clothing and lingerie
maker Etam (TAM.PA) is offering to buy back up to 26.5 percent
of its share capital in a deal worth up to 101 million euros.
The company, which reported 1 billion euros in sales for
2009, is offering to pay 35 euros per share for up to 2.9
million shares, it said in a statement Thursday evening.
Etam shares were suspended from trading on Wednesday after
reaching a price of 30 euros, valuing the business at 323
million euros. Trading is to resume on Monday.
The purpose of the deal is to offer shareholders who want
to sell the possibility of doing so at a premium while the
group tends to its struggling European business, Chief
Executive Laurent Milchior said on a conference call.
"There is a sizable reorganisation job ahead (for Etam) in
Europe that will not bear fruit straight away ... We think it
healthy to offer shareholders ... the possibility to exit," he
When asked whether Etam intended to delist entirely or sell
itself, Milchior said neither was desirable.
Etam has been the subject of takeover speculation for
several months, with some analysts expecting a bid from a
private equity firm.
The Milchior and Tarica families, Etam's main shareholders,
with 39 percent and 11 percent stakes, respectively, both said
they would not take part in the buyback offer.
If the offer succeeds, their controlling 50.3 percent stake
would rise to 68.5 percent, leaving a free float of 31.5
percent, Milchior said.
SHARE PRICE "FLOOR"
The deal could help set a floor for Etam's share price at
around 35 euros, said one Paris-based analyst.
"It could serve as a price floor until eventually a new
offer (from Etam) arrives," the analyst said, adding that Etam
currently could not afford to buy up all the free float, nor
would it want to sell to a private equity buyer.
The stock has risen threefold in the last 12 months due to
cost-cutting and strong sales in China and France.
But Etam's first-quarter figures released on Thursday
showed a 5.5 percent decline in sales in Europe. The company
said it was working on turnaround measures after 10 successive
quarters of declining sales in Europe on a like-for-like
Etam has Czech model and actress Eva Herzigova and Russian
model Natalia Vodianova as brand ambassadors. It sells more
than 50 million items per year, with some of its collections
designed by Lolita Lempicka.
The name Etam is short for the etamine fabric used in
Etam's history goes back to founder Max Lindeman in Berlin
in 1916 and the 1928 opening of a shop on the fashionable Rue
Saint Honore in Paris. It has been listed since 1997.
Rivals include Princesse Tam Tam and Hunkemoller of
Etam has been struggling to fend off fierce competition
from fast-moving retailers such as Sweden's H&M (HMb.ST), Gap
Inc (GPS.N) of the United States and Spain's Zara, owned by
Etam sold its British stores to Philip Green in 2005.
(Reporting by Lionel Laurent and Marcel Michelson; Editing by
Will Waterman and John Wallace)