FRANKFURT (Reuters) - Megha Mittal will buy insolvent German luxury fashion house Escada ESCG.DE for an undisclosed price, the company said on Thursday.
“Today the insolvency administrator of ESCADA AG signed a sale and transfer agreement with one of the Mittal Family Trusts,” the company said in a statement late on Thursday after the preliminary creditors’ committee approved the deal.
“The Board of Management and the new investor have agreed to cooperate on the basis of the business strategy launched in mid-2008 securing continuity of the operative business,” Escada continued.
All key assets of Escada’s operating business as well as shares in its subsidiaries will be transferred to Mittal’s trust, excluding those that serve as guarantor for the Escada bond.
Escada, once one of the world’s top fashion labels, filed for insolvency in August after years of diminishing sales took their toll and a broad restructuring plan failed to win approval from bondholders.
Mittal won the bidding war for Escada against Sven Ley, son of Escada founder Wolfgang Ley. He said on Tuesday he had teamed up with the former head of Gucci, Giacomo Santucci, and Italian investment group Borletti to mount a rescue bid.
Megha Mittal, the 33-year old daughter-in-law of ArcelorMittal ISPA.AS Chief Executive Lakshmi Mittal, had also expressed an interest in Escada.
German newspapers reported on Thursday that Lebanon’s influential Mikati family was also among the front-runners.
The family runs M1 Group, a multi-billion dollar conglomerate invested in real estate, Geneva airline Fly Baboo and fashion line Facconable, as well as oil and gas.
The crux of the bidding war revolved around who will manage Escada in future.
The consortium around Ley had said it would replace the current CEO, Bruno Saelzer, with Santucci.
Mittal, on the other hand, supports Saelzer’s approach of turning Escada into an affordable luxury fashion brand, offering more day-wear rather than the glamorous evening gowns Escada was once known for, the Mittal family source said.
Mittal would take a supervisory board seat, the source said.
Mittal has been looking for an investment in the fashion industry for about a year and has also expressed interest in Italian fashion brand Gianfranco Ferre ITH.MI.
Reporting by Eva Kuehnen