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Safilo secures Hilfiger deal
Personal Goods ; Eyewear maker's shares rise 8.5%
Safilo, the Italian eyewear maker, announced a deal yesterday to make sunglasses and other eyewear for Tommy Hilfiger that suggests the company may finally be turning the corner.
The announcement sent Safilo's share price up 8.5 per cent. In October the company's shareholders and bondholders were offered a rescue deal by HAL Holding, a Dutch investment group, which is to inject up to EUR330m ($485m) of new capital into Safilo and will acquire a stake of up to 49.9 per cent.
Safilo, is the world's second largest maker of eyewear behind Luxottica. It had revenues of EUR775m in the nine months to September this year, but it has nearly EUR600m of net debt and has been struggling with a downturn in luxury goods spending in the wake of the financial crisis.
Analysts said yesterday that the deal with Tommy Hilfiger, the US fashion chain, was a sign that the company may be over the worst now that its future had been effectively secured by the HAL investment. They said the rise in the share price reflected both relief and optimism among investors.
The deal allows for the design, development, manufacture and distribution of eyewear and sunglasses products for Tommy Hilfiger to be available by the autumn of next year. The agreement lasts until 2015 and is renewable for a further five years. The contract is understood to be "significant" for Safilo, though smaller than similar deals the company has with brands such as Dior, Armani and Gucci. Some 80 per cent of Safilo's revenues come from such licensing agreements.
Analysts said the deal appeared to play to Safilo's strengths in manufacturing, design and distribution. Roberto Vedovotto, the company's chief executive, told the FT in October that he wanted Safilo to concentrate on its wholesale operations. He said yesterday the agreement with Hilfiger "will perfectly enhance our brand portfolio".
Several private equity groups walked away from a possible investment in Safilo, turned off by the group's prospects. HAL's offer also nearly failed before the Dutch group amended the terms of the deal. Shareholders in Safilo are expected to approve the terms of the deal next week.
Personal Goods ; Eyewear maker's shares rise 8.5%
Safilo, the Italian eyewear maker, announced a deal yesterday to make sunglasses and other eyewear for Tommy Hilfiger that suggests the company may finally be turning the corner.
The announcement sent Safilo's share price up 8.5 per cent. In October the company's shareholders and bondholders were offered a rescue deal by HAL Holding, a Dutch investment group, which is to inject up to EUR330m ($485m) of new capital into Safilo and will acquire a stake of up to 49.9 per cent.
Safilo, is the world's second largest maker of eyewear behind Luxottica. It had revenues of EUR775m in the nine months to September this year, but it has nearly EUR600m of net debt and has been struggling with a downturn in luxury goods spending in the wake of the financial crisis.
Analysts said yesterday that the deal with Tommy Hilfiger, the US fashion chain, was a sign that the company may be over the worst now that its future had been effectively secured by the HAL investment. They said the rise in the share price reflected both relief and optimism among investors.
The deal allows for the design, development, manufacture and distribution of eyewear and sunglasses products for Tommy Hilfiger to be available by the autumn of next year. The agreement lasts until 2015 and is renewable for a further five years. The contract is understood to be "significant" for Safilo, though smaller than similar deals the company has with brands such as Dior, Armani and Gucci. Some 80 per cent of Safilo's revenues come from such licensing agreements.
Analysts said the deal appeared to play to Safilo's strengths in manufacturing, design and distribution. Roberto Vedovotto, the company's chief executive, told the FT in October that he wanted Safilo to concentrate on its wholesale operations. He said yesterday the agreement with Hilfiger "will perfectly enhance our brand portfolio".
Several private equity groups walked away from a possible investment in Safilo, turned off by the group's prospects. HAL's offer also nearly failed before the Dutch group amended the terms of the deal. Shareholders in Safilo are expected to approve the terms of the deal next week.
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