Italy’s loafer king can afford to be more generous

Tod's Chairman Diego Della Valle gestures during an interview a day before the presentation of the Colosseum dungeons which have been restored in a multi-million euro project sponsored by the fashion group in Rome, Italy, June 24 2021. Picture taken June 24 2021. REUTERS/Remo Casilli - RC227O9E9EEC

MILAN, Sept 29 (Reuters Breakingviews) - Tod’s (TOD.MI) founder Diego Della Valle is seeking to delist his bling shoemaker on the cheap. The Italian tycoon on Monday launched a takeover bid at 40 euros a share for the company he controls with a 65% stake. The bid, which offers a skimpy 20% premium and matches Tod’s 2000 listing price, looks a bit opportunistic. Economic uncertainties linked to the Ukrainian war had dragged the Italian high-end group’s shares down 35% this year before the offer came along.

Investor Tabor Asset Management believes that, taken separately, the Italian group’s brands warrant an offer of at least 76 euros a share. That’s probably ambitious. But the argument has merit. Assuming total revenue growth of 7% in 2023, pricey pumps maker Roger Vivier could be worth 1 billion euros at Prada’s 4 times sales multiple. And the Tod’s brand itself could be worth the same if valued on a par with Salvatore Ferragamo’s (SFER.MI) 1.9 times revenue multiple. Weaker players Fay and Hogan could jointly fetch some 500 million euros if valued at a cross between Ferragamo and H&M’s (HMb.ST) valuations. That would push the price tag to 60 euros a share, 50% above the current offer, Breakingviews calculations show. With so much hidden value to reap, Della Valle can probably afford to be a tad more generous. (By Lisa Jucca)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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