Shares of Puma stock rose almost 10% last Thursday on market talk that French luxury-goods retail group PPR is in advanced talks with the sportswear manufacturers largest shareholder to buy its 30% stake and then make a bid for the rest. A deal would value Puma at more than 5.4 billion ($7.2 bn).
The Wall Street Journal reported that two Herz family members, Günther and Daniela, who control nearly 30% of Puma, are near a deal to agree to sell to PPR.
Such a move could take Puma further up-market. PPR owns luxury-goods company Gucci Group, which includes the high-end Gucci, Yves Saint Laurent and Balenciaga brands. It also owns the catalog La Redoute and French stores Printemps and FNAC.
Both Puma and PPR declined comment.
A deal of this size would be a major acquisition for Paris-based PPR. Other bidders may emerge, and Nike has been rumored to be interested in Puma. But securing a deal for Puma for another bidder would be difficult if PPR has an agreement to purchase the Herz shares, which come with two seats on the supervisory board.
The article states that Puma has been coveted by makers of other sportswear lines, particularly as it has emerged as a more hip and trendy brand in recent years. PPR is missing a fashionable line for casual daytime use and sportswear. PPR has done business with Puma before: Designer Alexander McQueen, whose eponymous fashion house is part of Gucci Group, has designed high-end sneakers for Puma.
Puma's 2006 sales jumped 33% to 2.37 billion ($3.2 bn) from 2005. But its net profit in 2006 dropped 7.9% to 263.2 million ($352 mm), weighed down by higher marketing costs during the World Cup soccer tournament in Germany.
Puma shares finished the week up 15.1% to close at $315 on Friday.
