PPR SA (EPA: PP) owns high-class brands like Gucci, Balenciaga, and Yves Saint Laurent. And so now the company wants Puma? Isn't that going down-market?Actually, it looks like it's a play to bring Puma into the luxury zone. To this end, PPR bought up a 27.1% stake in Puma and wants the rest of the company (this is according to a story in the Wall Street Journal, which is a paid service). It could be a deal in excess of $7 billion.
I had a chance to talk with Fred Lipman, who is an M&A lawyer and partner at Blank Rome. He thinks there should not be a problem in terms of antitrust clearance.
Although, PPR might have to raise its bid. "Puma's stock price is already over the offer," said Lipman. "Just like the US, there are many hedge funds in Europe that can drive the stock price. To get this deal done and get the shareholder votes, PPR might have to increase the bid – unless it feels it can fight for the current deal."
Lipman also thinks another big issue is the strategic rationale of the deal. According to him: "Are we ready for Gucci Pumas?"
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
