* PPR to help Pomellato expand geographic footprint
* PPR shares rise 2 pct
By Astrid Wendlandt and James Regan
PARIS, April 24 PPR is buying Milanese
jeweller Pomellato with the aim of developing it into a global
brand and expanding the French luxury and sports group's
presence in the jewellery market.
The group, which already owns Boucheron and acquired China's
Qeelin last year, said it was looking for further opportunities
in the branded jewellery sector.
The industry is increasingly dominated by mega brands such
as Richemont's Cartier, Tiffany and Bulgari,
adding pressure on mid-sized players like Pomellato to tap big
groups to grow and fund costly ad campaigns.
Analysts predict annual sales in the branded jewellery
segment of the luxury industry are set to rise between 5-10
percent over the next few years as consumers increasingly regard
jewellery products as fashion items.
PPR, which owns fashion brands Gucci, Yves Saint Laurent and
Stella McCartney, is changing its name to Kering in June to mark
the completion of its transformation from a retail to a sports
and luxury group.
Pomellato is known for its colourful wares advertised by
actress Tilda Swinton and its cheaper Dodo line - named after
the extinct Mauritian bird - which specialises in animal motifs.
PPR declined to give the transaction's financial details but
Chief Financial Officer Jean-Marc Duplaix said the price was "in
line with the multiples of the industry."
He said Pomellato's earnings before interest, tax,
depreciation and amortisation (EBITDA) amounted to 15 percent of
the company's 146 million euros of sales last year, up from 102
million euros in 2009.
Analysts estimated the deal gave Pomellato an enterprise
value of around 380 million euros, or 16 times EBITDA, which
included debt of 60 million.
"The price seems correct in light of the brand's growth
potential and margin growth prospects," said Marc Willaume,
analyst at broker Raymond James.
Tiffany trades on 9-10 times EBIDTA while Swiss watch group
Swatch acquired the fine jewellery unit of Canada's
Harry Winston earlier this year for 31 times its EBITDA.
When LVMH took on Bulgari in 2011, it paid 28.2
times the Roman jeweller's EBITDA.
Shares in PPR, which rose more than 2 percent in early
morning trade, were 1.25 percent higher at 174.65 euros by 1130
GMT, among the top performers on a 0.7 percent firmer French
blue-chip CAC 40 index.
PPR said it had a signed the deal with Ra.Mo, the holding
through which Pomellato's founder Pino Rabolini and Chief
Executive Andrea Morante control 79 percent of the company.
Rabolini sold his entire stake but Morante, who would remain
as chief executive, had kept a small stake, leading analysts to
estimate PPR acquired a holding or more than 75 percent.
Italian jeweller Damiani, whose bid for control of
Pomellato was rebuffed by the company's board, sources told
Reuters last month, will retain its 18 percent stake.
Asked if PPR would consider buying out Damiani, Duplaix
said: "It is not a priority for us at the moment."
The Pomellato purchase will boost PPR's average growth
profile, held back by struggling sports brand Puma and
mature luxury fashion brands such as Gucci.
"Pomellato enters in a new phase where PPR can provide the
needed financial resources (probably missing beforehand) to
invest in the retail network development and bring the brands to
a global scale," said Mario Ortelli, an analyst at Bernstein.