Luxury group Kering said it intends to spin off a majority stake in Puma by distributing the stake to its own shareholders.
The Paris-based company plans to ask shareholders to approve distributing 70 percent of Puma’s outstanding shares, which would reduce Kering’s stake to 16 percent from 86 percent. That would permit Kering to focus on its luxury business through brands including Gucci, Balenciaga and Stella McCartney.
As a consequence, Kering’s largest shareholder Artémis would receive approximately 29 percent of Puma’s share capital and would become a direct and long-term shareholder. The transaction enables Kering to focus on its core luxury business in high-end fashion, leather goods as well as jewelry and watches.
In a statement from Puma SE, the company said the spinoff will lead to a greater free float of Puma stocks, providing investors an enhanced possibility to invest in Puma, and allowing the company to reaffirm its business strategy.
“We are very pleased that Kering has proposed this way to reduce its stake in Puma. It would allow us to continue with our current business strategy that has started to show good results,” said Bjørn Gulden, CEO of Puma. “We would be able to carry on to invest in becoming the Fastest Sports Brand in the world, create value for retailers, improve performance for athletes and excite consumers.”
The transaction would increase Puma’s free float from currently 14 percent to approximately 55 percent.
“Puma would become much more attractive for investors as our shares would have a substantially higher free float and larger trading volumes. Kering and Artémis, however, would remain strong partners and shareholders, which proves that they believe in our strategy and Puma’s future success,” said Gulden.
The transaction is subject to approval by the Annual General Meeting of Kering SA to be held on April 26, 2018.
Kering acquired its controlling stake in Puma in 2007 as part of a strategy to complement its luxury portfolio with sports brands. Kering last year sold Electric, the snow-goggles manufacturer, which it acquired via its 2011 purchase of skategear brand Volcom.
In a separate statement, Kering said the contemplated project would enable Kering to reinforce its status as a leading pure player in luxury with an enhanced, best-in-class profitability. The Group’s ambition is to continue to grow and develop its powerful ensemble of Houses in Couture, Leather Goods, Jewellery and Watches, leveraging on its high cash-flow generation and strong financial position.
Upon completion of the envisaged distribution of Puma shares, Kering shareholders would directly benefit from the value creation potential Puma, further enhanced by an increased free float and stock market visibility. Kering said in the statement, “With Puma’s unique DNA, heritage of innovation and creativity, the ongoing successful implementation of its “Forever Faster” transformation plan has started to deliver results. The brand is enjoying strong revenue growth momentum and achieving an improvement in its profitability. Furthermore, Puma’s management team is fully committed to pursue its successful strategy, and continue to deliver the growth and profitability potential of the brand.”
François-Henri Pinault, Chairman and CEO of Kering, stated: “The contemplated distribution of Puma shares to our shareholders would be a significant milestone in the history of the Group. Kering would dedicate itself entirely to the development of its Luxury Houses, whose enduring appeal, built on creative audacity and innovativeness, will allow us to continue to gain market share and create value.
“This operation would enable our shareholders to directly benefit from Puma’s future value creation. We are proud to have supported the turnaround of Puma, which now has unrivalled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth, led by its talented and passionate management team. We have laid strong foundations for a bright future for Puma. The full support of both Artémis, which would become Puma’s main shareholder, and Kering, as a significant minority shareholder, reflects a strong confidence in the company’s ability to continue to deliver its strategic and financial objectives.”
Kering will immediately initiate the information and, as the case may be, consultation processes with the relevant works councils’ representatives in accordance with applicable laws.
Final terms of the distribution in kind of Puma shares to Kering shareholders are under review and will be submitted to the vote of Kering shareholders at the Annual General Meeting on 26 April 2018. Further announcements will be made in due course.
Photo courtesy Puma