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pursuits

Puma Surges on Report That Kering Is Open to Divesting Business

Updated on
  • Puma CEO says he hasn't `heard anything' about potential sale
  • VF Corp. could be potential suitor for Puma, analyst says

Puma SE rose to the highest in almost two years after Bloomberg News reported that Kering SA is open to selling its majority stake in the sporting-goods maker.

Puma surged as much as 6.2 percent to 219.3 euros in Frankfurt, the steepest intraday price since January 2014, after the company also reported third-quarter earnings that beat estimates. Kering views Puma as peripheral to its long-term strategy, a person familiar with the matter has said, although a formal sale process hasn’t started.

Puma Chief Executive Officer Bjoern Gulden -- who said Friday that he had not “heard anything” about a potential sale -- has reversed a slump by refocusing the company’s image on sports and on-the-field performance. Revenue, fueled by running shoe growth, rose 8.4 percent in the third quarter. Still, profitability has narrowed every year under Kering’s ownership.

“Speculation around Kering’s desire to be open to a potential disposal of Puma affects the share price even more than the numbers,” Jurgen Kolb, an analyst at Kepler Cheuvreux, said in a note to clients. 

Market Value

Puma could fetch as much as 4 billion euros ($4.4 billion), according to MainFirst analyst John Guy, who predicts a disposal as soon as the second half of 2016. Its current market value is about 3.3 billion euros. Kering, then called PPR, bought control of Puma in 2007 in a deal that valued the German business at 5.3 billion euros.

Citigroup analyst Thomas Chauvet sees a sale to a trade buyer like VF Corp. as the most likely exit scenario. The U.S. company has said it’s willing to invest more than the $2 billion it spent on Timberland in 2011 making acquisitions and could take advantage of the dollar’s strength compared with the euro, the analyst said. VF shares reversed a loss Thursday in New York after Bloomberg’s report and ended the day up 1.9 percent.

Disposing of Puma, the maker of Usain Bolt’s running shoes, would be an about-face for Kering Chief Executive Officer Francois-Henri Pinault, who in February pledged to fix the brand known for its leaping-cat logo.

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