Permira Advisers LLP is in talks with advisers about a potential sale of its remaining stake in German fashion house Hugo Boss AG seven years after taking control, according to three people with knowledge of the matter.
The private-equity firm, which owns about 50 percent of Hugo Boss, is in discussions to find a buyer for the stake, which is valued at about 3.7 billion euros ($5 billion), said the people, who asked not to be identified because the information isn’t public. No decision has been made.
Permira holds Hugo Boss through its Red & Black investment vehicle, and has cut its stake through two share sales in the past 18 months. The London-based firm’s preference is to sell the stake in a single transaction because a series of sales to institutional investors could hurt the stock price, the people said.
Red & Black had a 50 percent holding in Hugo Boss as of June 30, 2014, Hugo Boss said July 31. In May, shares in the Frankfurt-listed company fell as much as 3.4 percent after the investor said it had sold about 5.6 percent of its stake for
401.6 million euros.
Representatives for Permira and Hugo Boss declined to comment.
Under Chief Executive Officer Claus-Dietrich Lahrs, Boss shares have more than quintupled in price in the past five years. The maker of perfume advertised by Gwyneth Paltrow and the slim-fitting duds worn by German national soccer coach Joachim Loew on the World Cup sidelines has been reclaiming control over its distribution and marketing by opening more of its own stores. The company also hired star designer Jason Wu, who designed inaugural gowns for Michelle Obama.
Under German takeover law, when a buyer acquires at least 30 percent in a target company, they are required to make an offer to the remaining shareholders unless granted an exemption by Germany’s regulator BaFin.
The shares have gained 19 percent in the last 12 months, compared to a 1.1 percent decline in the Bloomberg European Fashion Index.
In its second-quarter report on July 31, Boss said earnings before interest, tax, depreciation and amortization and excluding special items increased 8 percent to 110 million euros. Revenue rose 5 percent to 559 million euros.
Deal activity in Europe involving private-equity firms has risen 50 percent this year compared to the same period in 2013, boosted by deals in the retail and apparel sector, according to data compiled by Bloomberg. Pepe Jeans Group, which is owned by Torreal, Arta Capital, L Capital and management, is working with Morgan Stanley to explore the sale of the business, Bloomberg News reported on July 28.
In February, Italian fashion house Gianni Versace SpA agreed to sell a 20 percent stake to Blackstone Group LP for 210 million euros.