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The eyewear giant has reached an agreement with VF Corporation to acquire the Supreme brand for $1.5 billion in cash.

MILAN – In a surprise move, giant eyewear group EssilorLuxottica said Wednesday it had reached an agreement with VF Corporation to acquire the Supreme brand for $1.5 billion in cash.

“We see an incredible opportunity in bringing an iconic brand like Supreme into our company,” said Francesco Milleri, chairman and CEO of EssilorLuxottica, in a statement with Paul du Saillant, deputy CEO.

“It perfectly aligns with our innovation and development journey, offering us a direct connection to new audiences, languages and creativity. With its unique brand identity, fully-direct commercial approach and customer experience – a model we will work to preserve – Supreme will have its own space within our house brand portfolio and complement our licensed portfolio as well. They will be well-positioned to leverage our group’s expertise, capabilities, and operating platform,” he added.

The transaction is expected to close by the end of the year, subject to customary closing conditions and regulatory approvals.

The Supreme brand runs a digital-first business and operates 17 stores in the U.S., Asia and Europe. The sale of Supreme is expected to be dilutive to VF’s earnings per share in fiscal 2025.

“Under VF, Supreme expanded its presence in the key markets of China and South Korea and has returned to delivering strong growth,” said Bracken Darrell, president and CEO at VF.

“However, given the brand’s distinct business model and VF’s integrated model, our strategic portfolio review concluded there are limited synergies between Supreme and VF, making a sale a natural next step. Alongside the other notable brands in EssilorLuxottica’s portfolio, Supreme and its talented team will be well-positioned for continued success,” he added.

As reported in May, financial sources told WWD the luxury streetwear brand was quietly being shopped around to potential buyers and that VF Corp. — which bought Supreme for $2.1 billion in 2020 — was working with Goldman Sachs to review its portfolio at large.

While VF Corp. has been public about its desire to spin off parts of its business, it had not disclosed that it is working with Goldman or that Supreme was one of the brands tagged for sale.

“While we will always look to adjust the VF portfolio from time to time, this transaction gives us increased balance sheet flexibility,” concluded Darrell. “It also supports our overall program to better position the company for long term growth and more normalized debt levels.”

Supreme founder James Jebbia said that EssilorLuxottica is “a unique partner that understands that we are at our best when we stay true to the brand and continue to operate and grow as we have for the past 30 years. This move lets us focus on the brand, our products, and our customers, while setting us up for long-term success.”

J.P. Morgan and Latham and Watkins are serving as exclusive financial and legal advisors to EssilorLuxottica on the transaction, respectively. Goldman Sachs & Co. LLC is serving as lead financial advisor and UBS Investment Bank is serving as financial advisor to VF. Davis Polk & Wardwell LLP is acting as legal advisor to VF.

Established in 2018 by the merger of France’s Essilor and Italy’s Luxottica Group, the company in 2022 reported consolidated revenues of 24.5 billion euros. In addition to its proprietary brands, from Ray-Ban to Oakley and Persol, EssilorLuxottica licensed brands include Michael Kors, Giorgio Armani, Brunello Cucinelli, Burberry, Chanel, Coach, Dolce & Gabbana, Ferrari, Prada, Ralph Lauren, Starck Biotech Paris, Swarovski, Tiffany & Co., Tory Burch and Versace.

Jebbia has had to navigate some choppy waters at VF, where the brand is just part of a much larger picture.

VF, which has annual sales that approach $11 billion, owns the footwear-centric brands Vans, Timberland and Altra, performance apparel brands Smartwool, Icebreaker, outdoor brands The North Face and Napapijri and workwear name Dickies. The company’s backpack business, including Kipling, Eastpak and JanSport, is in the midst of a sale process already.

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Data centres are being repurposed for artificial intelligence-processing as crypto revenues flag

Bitcoin miners are rushing to sign deals with artificial intelligence developers in a bid to revive their flagging revenues by finding new customers for their vast data centres.

Crypto miners run powerful computing sites, often covering acres of land, where they solve complex mathematical puzzles in order to authenticate transactions and produce digital coins. But with high energy and computing costs, and with the rewards for mining having recently halved, many are struggling to turn a profit.

They now hope to benefit from a surge in demand for powerful but scarce chips — known as graphics processing units or GPUs — which are used in both crypto mining and AI processing. Tech companies are racing to get access to chipmaking giant Nvidia’s GPUs as they try to build more capable AI systems, and are increasingly doing deals to allow them to use miners’ chips or to put their own chips in miners’ data centres.

Core Scientific, one of the world’s biggest bitcoin miners, is “aggressively pursuing” AI deals, chief executive Adam Sullivan told the Financial Times. “It’s an incredibly important part of the business,” he added.

The Nasdaq-listed miner, which has data centres in Texas, North Carolina and Georgia, struck a deal with AI cloud provider CoreWeave last month that the companies estimate will be worth $4.7bn in revenue over 12 years. Nvidia-backed CoreWeave — itself a former crypto miner that pivoted to AI several years ago and saw its valuation leap to $19bn in May — will use Core Scientific’s data centres to host its AI chips. 

AI companies require a large amount of energy and computing infrastructure, two things that bitcoin miners typically have access to. AI groups are betting that using miners’ high-performance computing (HPC) data centres will be faster and cheaper than building their own.

Big Tech companies including Microsoft, Google and Amazon have said they plan to spend tens of billions of dollars to develop data centre infrastructure to support their AI ambitions. Demand for AI capabilities has also fuelled investor interest in new cloud start-ups such as CoreWeave and Lambda Labs, which focus on renting access to GPUs.

“It [normally] takes 3-5 years to build an HPC-grade data centre from scratch,” JPMorgan analysts wrote in a recent note, adding that this timeline has grown even longer because of the increased demand for AI projects.

“This scramble for power puts a premium on companies with access to cheap power today,” they added. 

Other big bitcoin miners are using some of their data or processing capacity for AI. 

US hedge fund Coatue Management, founded by “Tiger cub” fund manager Philippe Laffont, recently invested $150mn into Hut 8 to help the bitcoin miner upgrade its infrastructure to meet AI companies’ needs. The mining company also recently created a new AI division.

Asher Genoot, Hut 8 chief executive, said the company — which takes its name from a building at Bletchley Park where mathematician Alan Turing worked during the second world war — has focused on the “massive demand and growth within the data centre segment, primarily driven by a lot of the AI demand”.

Bitcoin miners hope that shifting their strategy towards AI will give them higher, more stable revenues.

Many miners, including Core Scientific, collapsed into bankruptcy in 2022 after the failure of crypto exchange FTX and a plunge in the price of bitcoin below $16,000.

Even though crypto prices have soared since then — bitcoin hit a record high above $73,800 in March and is now trading at around $63,800 — the financial rewards they can earn from mining each new block of bitcoin have been reduced by the quadrennial bitcoin halving event in April. The high cost of energy and technology have also hit their profitability.

Canadian miner Hive is also focusing on “increasing revenue from its suite of Nvidia GPU chips powering data services for the AI revolution”, the company said, while New York-based Bit Digital agreed a $275mn three-year contract in January to rent out its data centre space to a company building large language models.

“We understood the halving was imminent and we felt that with margins being compressed overnight by 50 per cent it doesn’t always make sense to run on the hope that bitcoin goes up, it’s just not a great business practice,” said Sam Tabar, chief executive of Bit Digital.

“We’re simply renting computational power to people who are building AI models, we’re dealing with the hardware part of that,” he added.

However, the race to build out new data centres is straining electricity grids in some parts of the world, given the huge power requirements of HPC. Bitcoin mining is also highly energy intensive, and both sectors have been criticised for the vast amounts of power they consume.

Google’s greenhouse emissions have surged 48 per cent in the past five years, amid the expansion of its data centres for AI processes, while bitcoin mining uses more energy than Pakistan or Ukraine annually, according to data from the University of Cambridge.