Ermenegildo Zegna to Go Public with SPAC Agreement

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In 1910, Ermenegildo Zegna was founded as a family-run woolen fabric manufacturer on the outskirts of Northern Italy.

On Monday, the company, a global luxury fashion house with the Thom Browne brand, took a big leap into the public stock market through one of the biggest trends on Wall Street in recent years.

Zegna announced on Monday that it will be listed on the New York Stock Exchange by merging with a publicly traded buyout fund known as stocks. SPAC. The deal is expected to be worth about $3.2 billion, including debt to Zegna, and could open a way for other private luxury giants to follow suit.

The deal is also the latest sign that major luxury fashion companies are poised to grow even bigger, seeing an opportunity to take over rivals and become empires. This is a trend perhaps exemplified by LVMH Moët Hennessy Louis Vuitton, who in recent years has made deals to buy the likes of the fashion empire. Tiffany and Company.

Such takeovers have increased in recent years as rivals across the ocean take on similar empire-building ambitions. Capri Holdings, formerly known as Michael Kors Holdings, Acquired Italian fashion house Versace bought companies like Tapestry, Kate Spade and Stuart Weitzman, once known as Coach, for $2.1 billion in 2018.

The luxury industry has become resilient as consumers continue to spend on jewellery, clothing and other pleasures, including as the global economy slowly recovers from a pandemic. Shares of LVMH, whose brands include Dior, Stella McCartney and Fenty, are up more than 60 percent this year; Those at Kering, the parent company of companies like Gucci and Saint Laurent, rose 45 percent.

For most of its existence, Zegna was known primarily as a top manufacturer of menswear fabrics and later suits. (Still making suits for other top labels, especially Tom Ford.) However, with the acquisition of a majority stake in the fashion label in 2018 Thom Browne, Zegna launched its own ambitious plan to become a stable of luxury brands.

Zegna currently operates around 300 stores in 80 countries. And in a sign of optimism regarding resurgent consumer spending on fashion, the company expects its sales to approach pre-pandemic levels this year.

While Zegna’s quest for more resources to expand isn’t new, how it does it is new.

It merges with a SPAC, officially known as a special purpose buyout company – a fund raised on exchanges solely for the sole purpose of merging with a private company and giving it a stock listing.

“We will continue to invest in creativity, innovation, talent and technology to maintain Zegna’s leading position in the global luxury market,” said Ermenegildo Zegna, the company’s CEO and grandson of the founder.

The popularity of these types of funds has exploded over the past two years as they allow companies to participate in the stock markets faster than in a traditional IPO. (SPACs are increasingly coming under scrutiny by regulators in the United States, where many of these funds are listed.)

The merger with Zegna is a fund run by Investindustrial, a European investment firm. The deal will give Zegna about $880 million in fresh cash while allowing the founding family to retain about 62 percent of its stake.

“Our goal now is to open up the opportunity to the public to invest in one of the last great iconic independent luxury brands while supporting the public in this important new chapter in its history,” said Sergio Ermotti, president of Investindustrial SPAC. Declaration.

The deal is expected to close by the end of the year pending approval from SPAC’s shareholders.

Vanessa Friedman contributing reporting.

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