PPR Confirms It’s in Talks to Acquire Chinese Luxury Company

PPR SA (PP), the French owner of Gucci, said it’s in discussions to buy a Chinese luxury company to bolster growth in its largest market for high-end goods.

Talks are at an early stage and the acquisition may be completed this year, PPR Chief Executive Officer Francois-Henri Pinault said in an interview in today’s Hong Kong Economic Times. PPR spokesman Paul Michon confirmed the interview when contacted by Bloomberg News, though declined to comment further.

Pinault said in May he was “uber optimistic” on PPR’s prospects in China. Revenue at PPR’s luxury division, which includes Gucci, Bottega Veneta and Yves Saint Laurent, climbed 18 percent in the first quarter, excluding currency swings and acquisitions, led by a 20 percent increase in emerging markets.

PPR is reorganizing to focus on luxury goods and so-called sports-lifestyle brands such as Puma to tap rising demand for branded apparel and accessories in Asia and Latin America. The company, which sold furniture retailer Conforama last year, also plans to sell online retailer Redcats and the Fnac electronics and media chain, with some proceeds being used for acquisitions.

Small- and medium-sized companies with growth potential would interest PPR, which has looked at targets in Brazil and Asia, according to Pinault. The Paris-based company agreed to buy Italian suitmaker Brioni Roman Style SpA for less than 350 million euros ($430 million) in November and surf, skate and snowboarding clothier Volcom Inc. for $608 million in May 2011.

PPR would be interested in acquiring a Chinese brand “with its own identity” that doesn’t follow the European concept of luxury goods, Pinault said in September. The company, which is seeking to expand in jewelry, “looked at a brand that was born in Hong Kong, but it’s too small,” he said at the time.

Hermes International SCA (RMS), the Paris-based maker of Kelly handbags, already owns a Chinese luxury brand, having opened its first store under the Shang Xia label in Shanghai in 2010.

PPR was down 0.4 percent at 112.45 euros at 11:48 a.m. in Paris trading.

To contact the reporter on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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