Italian luxury fashion group Ermenegildo Zegna has entered into an agreement to become a public company by combining with a US special-purpose acquisition company launched by European private equity group Investindustrial and chaired by former UBS chief executive Sergio Ermotti.
This deal gives Zegna business an enterprise value of 3.2 billion dollars and puts an end to over 100 years of private ownership for the family business. They expect to raise about 880 million dollars and use the funds to reinforce Zegna’s menswear business, both organically and inorganically.
“Today’s announcement underscores the success of our strategy in constantly focusing on Zegna’s brand equity while continuing to strengthen our legacy. Our ethics of sustainability and the uniqueness of craftsmanship that has made our name synonymous with the highest quality and luxury globally,” highlighted Ermenegildo (“Gildo”) Zegna, the Italian luxury group’s CEO, on the back of the announcement to take the Italian luxury label public.
Zegna family to remain in control
The Zegna family will continue to have control of the newly taken public company, retaining a stake of approximately 62 percent.
Based on the transaction value, the merged entity will have an expected initial enterprise value of 3.2 billion dollars with an expected market capitalisation of 2.5 billion dollars, according to ‘Il Sole 24 Ore’.
On that note, Gildo Zegna told the ‘Financial Times’ that they “could have remained independent for another 100 years. But the moment is appropriate and the world has changed a lot and luxury has become very challenging.”
The financial details of Ermenegildo Zegna’s agreement to go public
On July 18, 2021, IIAC signed a definitive aggregation agreement with the Zegna group through a combination of shares and cash financing. The transaction is expected to generate approximately 880 million dollars in gross proceeds, broken down as follows:
• 403 million dollars in cash held by IIAC in the trust, • a fully subscribed Private Investment in Public Equity (PIPE) of 250 million dollars, • and 225 million dollars in a forward purchase agreement with Strategic Holding Group S.à.rl, an independent investment vehicle of Investindustrial VII LP (“SSH”).
“Our SPAC was created for precisely this type of operation: to bring on the stock market a well-managed company with solid fundamentals and strong growth potential like Zegna. Our goal now is to support the group in this new chapter of its history while providing the market with the opportunity to invest in one of the few iconic independent brands in the luxury world,” explained in a statement Sergio Ermotti, president of Investindustrial Acquisition Corp.
Zegna’s shares will trade on the New York Stock Exchange
The Ermenegildo Zegna Group will be listed on the New York Stock Exchange (NYSE) by the end of the year.
The transaction is scheduled for the fourth quarter of this year and will be subject to standard regulatory approvals and conditions. Once those are in place, IIAC shareholders have to vote favourably on the decision.
Image: Ermenegildo Zegna, official web