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Jimmy Choo looking for buyer to "maximise value for shareholders"

By Angela Gonzalez-Rodriguez

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Management |ANALYSIS

Jimmy Choo announced Monday that it's putting itself up for sale and looking for buyers. The decision not only has been strongly backed by the Board of Directors but also by namesake designer and company’s founder, who said to be “supportive of the sales process.”

The company, founded in 1996 by designer Jimmy Choo and former Vogue accessories editor Tamara Mellon, said it was considering a potential sale to "maximise value for its shareholders." Furthermore, Jimmy Choo executive team has discussed its plans with 68 percent shareholder JAB, which supports the process as part of a move away from a luxury sector it now considers "non-core".

Jimmy Choo said Britain's Takeover Panel has agreed that any talks with third parties can be conducted within the context of a "formal sale process". That enables talks with interested parties to take place on a confidential basis.

However, the firm said it is currently not in receipt of any approaches. The sale process will be run by BofA Merrill Lynch and Citigroup.

How did this (going on the sales table) happened to Jimmy Choo?

As explained by the British luxury retailer to investors, the decision is aimed at maximising shareholder value as majority investor JAB Luxury increases its focus on consumer goods. "JAB has therefore made the strategic decision to focus on its successful core businesses of consumer goods, including Coty Inc," the company said in a statement, adding that it expects the review to complete in the second half of 2017.

Last month Jimmy Choo reported a 15.7 percent rise in annual core earnings to 59 million pounds, on revenue up 14.5 percent, according to data collated by Reuters. Jimmy Choo sales dipped by nearly 2 percent in the U.S. last year, but it posted double-digit growth in Asia. Demand in China has been particularly strong.

"What remains to be seen is whether growing interest from Asia and the Middle East for luxury UK brands, will see Jimmy Choo receiving offers from foreign buyers searching for well-known British brands," said about the future consequences of the potential sale Jonathan Buxton, partner and head of consumer at Cavendish Corporate Finance.

Jimmy Choo’s shares gain 10 percent in London after sales’ announcement

On the back of the news, Jimmy Choo shares surged by as much as 10 percent, valuing the business at around 720 million pounds. It’s noteworthy that the stock, which floated on the London Stock Exchange at 140 pence in 2014, had increased 35 percent over the last year prior to Monday's announcement.

Since they started trading on the London Stock Exchange, shares in Jimmy Choo have been on a bumpy ride since the company's initial public offering in 2014. They hit a record low in June 2016 at less than 1 pound apiece.

JAB Holdings, the investment vehicle of Germany's billionaire Reimann family, has been building up its coffee and food chains and agreed this month to buy bakery group Panera Bread for 7.2 billion dollars. The investment firm’s luxury portfolio also includes British jacket brand Belstaff which could now be surplus to requirements. It indicated that it intended to retain its investment in beauty products maker Coty.

Photo: Ruben Dillan, Dual Gender, Jimmy Choo Corporate Web

Jimmy Choo