May 14 (Bloomberg) -- Shares of Valentino Fashion Group SpA, the Italian fashion house that controls Hugo Boss AG, may rise after Il Sole reported that the Carlyle Group will make an offer for the company.

Milan-based Valentino Fashion's stock, which has a market value of 2.6 billion euros ($3.5 billion), was halted pending a statement, the Italian bourse said this morning before Il Sole's report. Shares of Hugo Boss jumped to a record in Germany.

Chairman Antonio Favrin, who owns almost a fifth of the stock, said May 11 that Valentino was contacted by ``financial buyers'' about a potential bid, sending the shares up 5 percent. The Marzotto family is also reorganizing its holdings to become the main investor, with a stake of almost 30 percent. Carlyle, based in Washington, oversees about $54 billion of buyout, venture-capital and real-estate funds.

``The advantage of buying Valentino would be to group it with other luxury brands to optimize production and rationalize suppliers,'' said Gianluca Pacini, an analyst with Caboto Equity Research in Milan. ``For private equity to do all that would be a bit difficult. It doesn't make sense for the Marzottos to sell unless they have plans for other acquisitions.''

Pacini said he's reviewing his ``add'' rating on the shares following Favrin's comments, which were made at the company's annual meeting.

The report on Il Sole's Web site didn't say where the newspaper got the information. The paper's Radiocor news wire said Carlyle is offering 34 euros a share, about 3 percent below Valentino's closing price of 35.18 euros last week.

A Valentino spokeswoman who declined to be identified wouldn't comment on the upcoming statement. A Carlyle spokeswoman in London also wouldn't comment. Favrin wasn't immediately available today.

Carlyle Group

Women's Wear Daily, citing unidentified people, today said Favrin may seek to link up with a private-equity buyer to bid for the whole company and oust the Marzottos.

Favrin may sell his 19.7 percent stake to buyout funds, La Repubblica reported May 10, and asked Boston Consulting to evaluate the finances of Valentino and Boss.

David Rubenstein, William Conway and Daniel D'Aniello formed Carlyle in 1987. It's seeking as much as 5 billion euros from investors for its third European LBO fund. Past European investments include Terreal Terre Cuite, a French tilemaker, and infant car-seat maker Britax International Childcare.

Permira Involvement?

Buyout funds could buy both the Favrin and Marzotto stakes, which together account for 49.6 percent of Valentino, according to Rasbank analyst Carmelo Pappalardo, who has a ``neutral'' rating on the stock. He also said London-based Permira Advisers LLP may join Carlyle in a bid. A spokesman for London-based Permira wouldn't comment.

Under Italian regulations, any shareholder that acquires a 30 percent stake in a company is required to bid for the rest. Analysts including Elena Sottanella of Abaxbank in Milan have said Valentino may also be forced to buy the rest of Hugo Boss.

Hugo Boss shares jumped 2.75 euros, or 5.5 percent, to 52.79 euros at 1:19 p.m. in Frankfurt. The German company's market value is about 3.5 billion euros.

On May 11, Valentino Fashion reported first-quarter profit rose 17 percent on new stores and sales of women's clothing in Germany. The company's sales, three-quarters of which come from Hugo Boss, rose 8.4 percent to 637.7 million euros.

Valentino Fashion, created when Marzotto SpA spun off its controlling stake in Boss in 2005, has boosted revenue as the German company's fashions attract more women. Hugo Boss, better- known for its men's suits, said last month it expects to outperform the overall clothing market this year.

Buyout firms use a mix of their own funds and debt to pay for takeovers. They typically seek to expand companies or improve performance before selling them within five years to other funds or investors.

To contact the reporter on this story: Sara Gay Forden in Milan at sforden@bloomberg.net; Chiara Remondini in Milan at cremondini@bloomberg.net

Last Updated: May 14, 2007 07:47 EDT