【France, Ital】[World] Could Kering Group Acquire Moncler?

Following LVMH’s big deal with ‘Tiffany’, could ‘Moncler’ also be merged into Kering? After the news of Tiffany’s merger heated up the fashion industry last November, the industry is now watching to see if the mergers of luxury brands will continue with the recent meeting between Moncler and Kering.
Remo Ruffini, Moncler’s major shareholder and CEO, and the Kering Group, which owns ‘Gucci’, have communicated about the acquisition rumors but have flatly denied that there is any specifically confirmed deal. After Bloomberg reported on the possibility of a merger between Kering and Moncler, Moncler’s stock price rose at one point.

While this news has heightened interest in merger deals within the luxury industry, which is concentrated in a few giants like LVMH, Kering, and Richemont, some banks and related industries view a merger between these two as having little merit.
Chairman Ruffini, who acquired Moncler in 2003, has often stated in press releases:

However, he added, “At the moment, there is no firm hypothesis under consideration.”
Following Ruffini’s remarks, Moncler’s stock price rose by 8.5% at one point in the Milan stock market, and Kering’s stock price rose by 1.2% in the Paris stock market. Some banks predicted that Moncler, with a market value exceeding 10 billion euros in the stock market, would demand a high premium in the event of an acquisition. They expected that a merger would be unlikely to immediately balance Kering’s brand portfolio structure, which is heavily focused on apparel brands.

The industry sees that LVMH, the top luxury group and also a French company, recently moved swiftly to target the high jewelry sector, the fastest-growing segment in the luxury business, by acquiring the American jewelry brand Tiffany, creating a major buzz. This is viewed as a stimulus for its rival, the second-ranked Kering, to proceed with acquisition meetings.
This merger rumor has emerged amid forecasts that conglomerate groups with abundant liquidity, like LVMH and Kering, will make it increasingly difficult for independent companies to stand alone as they outpace competitors through aggressive investments such as hiring star designers and social media marketing.
These conglomerate companies also have the financial capacity to respond more flexibly to various situations, such as absorbing the shock of Hong Kong protests or investing in the mainland Chinese market, and they sometimes seek merger targets.

Moncler originated from the mountain village of Monestier-de-Clermont in Grenoble, France. Initially making sleeping bags, it later began to make its name known through sponsorship of the Winter Olympics and has since transformed into the edgy fashion brand it is today under Ruffini’s leadership.
Listed on the Milan stock market six years ago, Moncler has continued to grow by focusing on the Asian market and has reorganized its strategy with its unique ‘Genius’ concept, showcased through collaborations with designers.
Like its rival ‘Canada Goose’, which makes functional winter jackets, Moncler has also enjoyed a boom thanks to the surging demand for high-end streetwear. Ruffini stated in a 2018 interview with Reuters:

However, some analysts and industry insiders question whether the brand’s business model, which is overly focused on simple down jackets, is sustainable.

A well-informed source reported that Ruffini, the largest shareholder holding 22% of the group’s shares, has discussed the potential timing of a stock listing deal with Kering in the event of a merger. Ruffini has hinted several times in the past that he might sell the brand, and most speculate that Kering planned this merger to break away from a structure that is overly dependent on its cash cow brand, Gucci, for total revenue.
However, it is unclear whether Moncler is the optimal brand to change Kering Group’s portfolio. Luca Solca, an analyst at investment firm Bernstein, stated:

Another bank official said: