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Tod’s Surges as LVMH Invests More in Italian Shoemaker

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Albertina Torsoli and Angelina Rascouet
·2-min read
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(Bloomberg) -- Tod’s SpA shares surged after luxury French fashion house LVMH boosted its stake to 10%, fueling speculation that the troubled Italian shoemaker may become a takeover target.

The stock rose as much as 16% to the highest in more than a year Friday, bringing the company’s market value to about 1.3 billion euros ($1.6 billion). Tod’s Chief Executive Officer Diego Della Valle sold a 6.8% stake to LVMH for 74 million euros, the company said Thursday. The Paris-based owner of Louis Vuitton already held a 3.2% stake.

Jefferies analyst Flavio Cereda said this move may prompt speculation LVMH could take a further stake in the company.

“This may represent an excellent reason to consider further opportunities to be taken in the future ahead,” Della Valle said in the statement.

While LVMH and Hermes have shown resilience weathering the pandemic, Tod’s has struggled. Shoppers have turned away from the Italian shoemaker’s suede gommino loafers and Roger Vivier city pumps, switching to more casual footwear.

Any takeover would require the assent of Della Valle, who still owns about 64% of Tod’s after this transaction. LVMH now is stronger partner for Tod’s, which is still in need of a serious turnaround, Citigroup analyst Thomas Chauvet wrote in a note.

“The friendship with Diego Della Valle and his family goes back over 20 years,” LVMH CEO Bernard Arnault said in the statement.

Tod’s revenue last year slid by 30% compared to LVMH’s 16% drop. Tod’s has also suffered from its over reliance on European markets which with Italy represented almost half of its revenue last year. Europe has been the most negatively impacted region with many luxury stores still closed, over a year after the start of the pandemic.

Tod’s shares soared earlier this month after it appointed Italian fashion influencer and entrepreneur Chiara Ferragni as a director, a development welcomed by some analysts as Tod’s seeks to revamp its brand and attract younger customers.

LVMH was little changed in Paris trading on Friday. The company, which completed the acquisition of the U.S. jeweler Tiffany this year, has been gaining market share in the wake of the crisis sparked by the pandemic.

(Updates with context on Tod’s)

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