Armani's will instructs heirs to sell fashion brand or seek listing

In a surprise move, the late designer's will instructs heirs to sell 15% stake within 18 months, then up to 54.9%

Late designer Giorgio Armani has instructed heirs to gradually sell the fashion brand he created 50 years ago or seek a stock market listing, his will says, marking a surprising turn for a company highly protective of its independence and Italian roots.

The will states heirs should sell an initial 15% stake in the Italian fashion house within 18 months and later transfer an additional 30% to 54.9% stake to the same buyer between three and five years after Armani's death.

Armani died on September 4, at 91 and with no children to inherit his fashion empire.

The will proposes that priority should be given to luxury giant LVMH, beauty heavyweight L'Oreal, eyewear leader EssilorLuxottica or another group of “equal standing” identified by a foundation the designer set up to preserve his legacy with the agreement of Armani's business and life partner Pantaleo Dell'Orco.

As an alternative to the sale of the second tranche of shares, an initial public offering should be pursued, in Italy or in a market of equal standing, it said.

Armani was the sole major shareholder of the company he set up with his late partner Sergio Galeotti in the 1970s and over which he maintained a tight rein — creative and managerial — until the end.

Over the years the maker of popular unstructured suits that gained him international fame had received several approaches, including one in 2021 from John Elkann, scion of Italy's Agnelli family, and another from luxury brand Gucci, when Maurizio Gucci was still at the helm.

The will, which lists six different types of shares with different voting rights, gives the Fondazione Giorgio Armani and life partner and right-hand man Pantaleo Dell'Orco 30% and 40% of the company voting rights, respectively, meaning they would together control the fashion group with 70% of voting rights combined.

The foundation will retain a 30.1% stake in a listing, according to the will.

Its five-member board will be chaired by Dell'Orco, in accordance with the foundation's bylaws. Other board members include Rothschild partner Irving Bellotti, Armani's nephew Andrea Camerana and two family outsiders, according to a person close to the matter.

The Armani group has commercial partnerships with L'Oreal and EssilorLuxottica.

L'Oreal said it will study the opportunity.

“We're proud of the consideration our group and his management received from Mr Armani,” a spokesperson for EssilorLuxottica said. “Together with the board we'll carefully assess such a development prospect given the deep ties already existing between the two groups.” EssilorLuxottica manufactures Armani-branded eyeglasses under a licensing accord that runs until 2038.

With a market value of €240bn (R4.88-trillion) and a reputation for being a patient and supporting minority investor, conglomerate LVMH, controlled by billionaire Bernard Arnault, may ultimately prevail.

“We think LVMH would probably be the most interested, of the three, in a stake, were it to become available, given the strategic fit,” analysts at Berenberg said in a note. They said the group could easily afford to buy Armani, which they valued at between €5bn and €7bn (R101.83bn and R142.58bn).

Reuters