TheChek News Flow

Deal would be among biggest private equity purchases of a European telecoms group

KKR has launched a more than €33bn offer to take Telecom Italia private in what would be one of the largest private equity buyouts of a European company in history.

In a statement issued after a board meeting on Sunday, Telecom Italia said the US buyout fund had offered €0.505 a share in cash — a 45 per cent premium on the company’s closing price on Friday that would give the company an equity value of €10.7bn. It has roughly €22.5bn of net debt.

Telecom Italia said the KKR offer was intended to be friendly, in that it would have to be approved by the company’s board members, and was conditional on a four-week period of due diligence and the approval of the Italian government, which has veto power over a takeover of the group.

The board gave no indication over whether it would approve the deal.

The KKR offer also drew out interest from rival funds, with CVC and Advent “open” to discussions with stakeholders, according to a CVC spokesperson in Milan.

Shares in Telecom Italia were up 22 per cent to €0.42 on Monday morning.

The offer for the Italian group, whose market value had dwindled to €7.5bn before it became public, is the latest sign of private equity interest in the European telecoms sector. Funds are looking to break up businesses, separating the networks from the consumer businesses, to realise value or to improve the performance of the companies.

KKR already holds a 37.5 per cent stake in Telecom Italia’s “last mile” network but has made a full offer for the entire company.

It is the latest twist in the history of Telecom Italia which was the subject of a bitter tug of war for control four years ago between French investor Vivendi and US activist fund Elliott Management. That followed aborted attempts by Telefónica of Spain and AT&T of the US to buy the business. It has struggled in recent quarters and issued two profit warnings in the space of three months this year weakening its position.

Before news of the KKR offer its shares had declined by a quarter since June and almost two-thirds since 2018, piling pressure on Luigi Gubitosi, the Italian establishment figure appointed chief executive that year, to turn the company round. A board meeting had been planned for November 26 to discuss a potential management overhaul.

Vivendi denied it was in talks with KKR or CVC — as had been reported — or any other institution over a potential move for Telecom Italia. The French company is Telecom Italia’s largest shareholder with a 24 per cent stake followed by state lender Cassa Depositi e Prestiti, which owns almost 10 per cent.

“Vivendi is a long-term shareholder and we want to work with the government and other institutions to get Telecom Italia back on track,” the company said. “We’re not happy with the performance . . . The important thing is to stop this ship from going down.”

Telecom Italia was Europe’s most valuable telecoms company in the 1990s but has lurched from crisis to crisis over the past two decades. It is a politically important company and the government has a “golden power” to block takeovers or asset sales not deemed to be in the national interest.

The prime minister’s office and Cassa Depositi e Prestiti declined to comment on whether Rome planned to exercise its veto powers on foreign takeovers of strategic assets.

Italy’s Treasury said the interest in Telecom Italia “was good news for the country” and that the government will “evaluate its prerogatives carefully”.

“The government’s objective is to ensure these projects are compatible with the swift completion of the ultrabroad network as outlined in Italy’s EU recovery plan,” the Treasury added.

Officials in Rome said the government would follow the developments closely and that it would not give up its oversight of assets it considers “strategic” such as Telecom Italia’s primary network and its Sparkle high-density cables.

According to several people in Rome, KKR would be willing to split the company in two and leave the controlling stake of Telecom Italia’s network to a state-controlled entity such as Cassa Depositi e Prestiti. Such a move would clash with other telecoms buyouts, including Macquarie’s takeover of TDC in Denmark, where funds have targeted ownership of valuable network assets when looking to split up telecoms businesses.

Rome is not opposed to such a project, but will be “looking at several options” over the next few weeks, the people said.

They said KKR had asked Telecom Italia for a response to its offer, which was first reported by Corriere della Sera, within four weeks.

KKR is one of the most active investors in European telecoms. It bought a minority stake in Telecom Italia’s secondary network for €1.8bn last year through its infrastructure arm and was part of a consortium of private equity groups that took Spanish telecoms operator MasMovil private in a €5bn deal last year. It bought Hyperoptic, a UK fibre company, in 2019.

The US buyout group previously approached Dutch telecoms provider KPN with a takeover offer, which was rejected this year.

One of the year’s most talked-about launches was Louis Roederer’s Collection 242 – a new multi-vintage cuvée that will replace Louis Roederer’s Brut Premier. Made with a higher percentage of mature reserve wines, and a touch more oak, it marries Roederer’s signature precision and salinity with just a little more succulence. What really makes it different from the Brut Premier, though, is the fact it will evolve from year to year in line with the vintage. “The reserve wines will be the heart of each blend,” says cellar master Jean-Baptiste Lécaillon, “but the vintage will be its identity.” 

On the vintage front, this was a year that saw the release of some long-awaited 2008s. Hailed by many as the best vintage this century, 2008 was characterised by wines with big, structured acidity and great length. Krug 2008 showed the whole spectrum of orange from prickly zest and marmalade to orange flower – a complex, architectural wine that really rewards time in the cellar. The prestige cuvée Rare showed 2008’s more delicate side, with fine, complex fruit characters and great freshness. There were also rosés with real gravitas. Gosset Celebris Rosé 2008 was big and textural, with notes of cranberries and blood orange, edged with dark chocolate and spiced wood. Billecart-Salmon’s Cuvée Elisabeth Salmon was also excellent, marrying fine cherry and clementine acidity with rose notes and a gentle creaminess.

Many houses that had already released a 2008 got their teeth into 2012 – another great vintage, but a riper one that’s easier-drinking now. Dom Pérignon 2012 combines sherbetty pineapple, greengage and yuzu with a whiff of flintlock. Another standout was La Perle 2012, the prestige cuvée from Bollinger’s sister house Ayala, blending cloud-like creaminess with crab-apple sharpness.

For a luxurious blanc de blancs consider Dom Ruinart 2009 – 100 per cent Grand Cru, aged eight years on the lees, it’s as vinous as a white burgundy, with musky white peach notes and an elegant toastiness. Taittinger’s Comtes de Champagne 2011 already tastes fantastic: creamy lemon mousse, shortbread and a hint of struck match, borne on a wave of fine bubbles. Or for a great value non-vintage BdB, look to Champagne Palmer – its signature BdB is pure and silky with attractive aromas of lime flower. And if you see anything by chardonnay specialists Champagne Pierre Péters, snap it up.

Thanks to the increasingly noisy grower movement, 2021 was a year when unusual grape varieties came to the fore. Meunier most often plays a supporting role in blends (if it’s used at all). But more houses are now making cuvées that are majority or even entirely Meunier. The 100 per cent Meunier from up-and-coming Vadin-Plateau is excellent – fresh, floral and taut. Meanwhile, family-owned Drappier released its first 100 per cent Fromentau (Pinot Gris) champagne. Playfully entitled Trop m’en Faut! (“I can’t get enough!”), this unsweetened champagne is as esoteric as they come. But its character is generous and juicy, with notes of rosy apple skin and tropical fruit. 

CVC Capital and HPS Investment Partners join BlackRock, Simon and others as investors.

Authentic Brands Group is postponing its planned initial public offering thanks to a couple of new deep-pocketed partners.

The New York-based brand marketer said CVC Capital and HPS Investment Partners, along with its current stable of shareholders, have signed definitive agreements to purchase significant equity stakes in the company in a transaction that values it at $12.6 billion in enterprise value.

BlackRock, which has been ABG’s largest shareholder since 2019, will retain its majority position. Simon Property Group, General Atlantic, Leonard Green & Partners, GIC Private Ltd., Brookfield Property Partners, Lion Capital, Jasper Ridge Partners and Shaquille O’Neal will continue to hold significant equity positions in the company.

As a result, “we’ll be pushing the IPO to sometime in 2023 or 2024,” said Jamie Salter, founder and chief executive officer. ”This is a significant investment that has turned over our shareholder base — 50 percent is new money and 50 percent is old money that rolled over.”

He said he remains the largest individual shareholder in the company, but the private equity firms have bigger stakes. All told, ABG’s management team retains around a 20 percent interest.

”The investors are taking money off the table,” he said, “which is normal for a private equity firm. They can either do it this way or through an IPO.”

According to Salter, even though the IPO is being delayed, the company’s goals have not changed. “We pursued an IPO so that we could bring value to ABG and its shareholders. We are achieving exactly that with the onboarding of new equity partners.”

Without the scrutiny of the Securities and Exchange Commission, which would have been the case as a public company, Salter said: “We’re free to do whatever we want. We just made a deal for Iconic Images last week and Reebok closes on Feb. 28. And we expect to make a significant acquisition before the end of of the year.”

In addition, ABG is negotiating to purchase a fashion brand in the first quarter of 2022, he added, declining to reveal details.

“We have known CVC and HPS for many years and are thrilled that they are coming on board as significant stakeholders in ABG,” Salter continued. “Their commitment is a testament to the exceptional work our team has put forth as well as CVC and HPS’ confidence in our future growth. The entire ABG team — from our leadership to the director of first impressions — has done an incredible job of building a sustainable and scalable business with a laser focus on brand development, digital innovation, e-commerce, specialty retail, expansion into new verticals and proven business models.”

“The investments from CVC Capital and HPS Investment Partners are a strong vote of confidence in ABG’s long-term vision and strategic approach,” said Nick Woodhouse, president and chief marketing officer of ABG. “We are primed to continue furthering our global presence, acquiring new entertainment and lifestyle brands and driving organic growth for our portfolio.”

Salter founded ABG in 2010 and has built a portfolio of more than 30 brands in fashion, luxury, outdoor, home, entertainment, events, media and fine arts sectors. The company’s latest high-profile acquisition of Reebok will bring ABG’s portfolio to more than $20 billion in retail sales annually with global distribution in more than 150 countries.

Upon closing of the transaction, which is expected in December, representatives from CVC and HPS will join ABG’s board.

“We have followed ABG’s success story for several years and are delighted to be partnering with the company and its investor group,” said Chris Stadler, a managing partner at CVC. “The power of the ABG platform is evident in its growth to date, and we believe the company is only beginning to realize the full benefit of its scale and diversification. We look forward to working with Jamie, Nick and the talented team at ABG to create even greater value together.”

“ABG has shown that its unique business model can successfully innovate and grow brands across a broad spectrum of consumer categories, and we are excited to leverage CVC’s experience in the consumer, retail and media and entertainment sectors to support the company’s growth ambitions,” said Chris Baldwin, a managing partner at CVC. “We plan to work closely with the ABG team to execute on their strategic priorities, particularly around international expansion, given our extensive global footprint and experience in local markets around the world.”

“We are thrilled to partner with Jamie and his outstanding team, who we have known for nearly a decade, to support ABG’s ongoing development and growth strategy as it continues to lead the market in the brand licensing arena, underpinned by a highly differentiated and innovative acquisition and brand management platform,” said Scot French, a governing partner of HPS.

In August 2019, BlackRock became the largest shareholder in ABG when it invested $875 million through its Long Term Private Capital arm.

Since then, ABG has put plans in motion for an IPO. The paperwork was filed in the spring and was expected to value the company at around $10 billion, marking the entrance of a major new Wall Street player. That valuation put ABG right above Under Armour Inc. (with a market capitalization of $9.3 billion), Ralph Lauren Corp. ($9.1 billion), Kohl’s Corp. ($8.9 billion) and Capri Holdings Ltd. ($8.2 billion).

Although the IPO had been expected to be completed by this summer, the Reebok deal delayed it, sources said. Now it is two to three years down the road.

In August, ABG inked a deal to buy Reebok from Adidas for up to 2.1 billion euros. The German activewear firm said ABG would pay the bulk in money at the closing of the transaction and the rest would be comprised of deferred and contingent consideration.

Tiffany & Co.'s reimagined World's Fair Necklace was unveiled in Dubai today and is estimated to be worth between $20 million and $30 million.

Tiffany & Co. is asserting its expertise in high jewelry by revealing its most expensive piece ever.

The World’s Fair Necklace was unveiled Sunday at a Tiffany event in Dubai, United Arab Emirates, and is bejeweled with a total 180 carats of diamonds, all set in platinum. At its center is an 80-carat oval shape, D color and internally flawless diamond that Tiffany has christened “The Empire Diamond,” named for the New York City icon in the jeweler’s hometown.

And it’s currently available for sale. While Tiffany declined to reveal the necklace’s sticker price, industry experts estimate that it would cost somewhere between $20 million and $30 million. It is the most expensive piece in the jeweler’s history after its famous 128.54 carat “Tiffany Diamond,” which is not for sale and has been labeled by Tiffany as “priceless.” While the Empire Diamond is for sale, Tiffany hopes that whoever purchases it will agree to lend the piece for special brand exhibitions.

Plans for the necklace were originally revealed by WWD in January. The design takes inspiration from the Tiffany necklace made for the 1939 World’s Fair, which was originally set with an aquamarine stone weighing in excess of 200 carats.

When the 1939 World’s Fair was held in Flushing Meadows-Corona Park in New York City’s borough of Queens, Tiffany set up an extravagant display of new jewelry expressly designed in the American Art Deco aesthetic on which the jeweler grew its name.

In 2020, Tiffany’s archivists unearthed an original sketch for the necklace, depicted not with an aquamarine but a very large diamond.

For Tiffany & Co. chief gemologist Victoria Reynolds, the sketch’s discovery was serendipitous. “A short time later we were presented the opportunity to work with an incredible 80-carat diamond and I looked at the diamond and thought, ‘This is how we reimagine that [World’s Fair] necklace,’” she said.

The necklace’s 1939 iteration was set with a 200-carat aquamarine stone, 429 diamonds and it was priced at $28,000 (or about $557,000 by today’s value). By contrast, today’s version features a total of 578 diamonds, including the Empire Diamond, along with 353 round brilliant stones and 224 custom-cut baguettes. The piece took two years to complete from its initial concept phase.

As is customary of Tiffany & Co. diamonds since mid-2020, the Empire Diamond is fully traceable — it was mined in Botswana, cut and polished in Israel and set in Tiffany’s workshop in New York City.

Looking to further evolve the World’s Fair Necklace’s design, Tiffany included an element of versatility. The Empire Diamond can be popped out and mounted onto a ring by carefully unscrewing a few small fasteners around the stone. Whoever purchases the design will be bestowed with a lifetime service — a Tiffany jeweler will remain on-call to convert the piece from a necklace to ring or vice versa.

“It’s a new twist — something to add to it and improve from a technical standpoint. We considered our incredible jewelers’ skills and also modern engineering to [evolve the piece],” said Reynolds.

The World’s Fair Necklace was unveiled Sunday evening in Dubai, where Tiffany held the fourth leg of its high jewelry Blue Book event to sell its most extraordinary designs of the year. The concept kicked off in Shanghai in April, traveled to New York in September and L.A. in October. The Dubai Blue Book event, hosted at the city’s luxury multiuse building ICD Brookfield Place, was being held in concert with Dubai Expo 2021.

Tiffany chief executive officer Anthony Ledru said that high jewelry is as important to the jeweler as ever, and the category is seeing growing traction in global markets. “We are seeing a very dynamic trend for high jewelry and are experiencing the highest level of high ticket transactions in our brand’s history.

“This year’s Blue Book Collection has been very well received — especially with our renewed focus on the historic works of Jean Schlumberger. Money cannot buy history and money cannot buy style — our clients know this. As a result, we had a record year in China and the U.S. for our high jewelry collection. Dubai is the natural next destination for us.”

While in previous years Tiffany had held a large gala to unveil its Blue Book collection in New York by flying in top priority collectors to view its newest creations, pandemic-related travel restrictions have pushed the jeweler to consider a more localized approach.

For Ledru, this strategy plays back to Tiffany’s roots and has been such a success that he hopes to implement it more widely in the coming years. “Our founders have been traveling the world for international fairs since the early days of Tiffany — a practice that was not common at the time,” he said. “Being present in all of the key markets in the world is in line with our company’s DNA and we will carry on this legacy. We have a vast global footprint and will build upon that in each market with specialized events…This will give clients the opportunity to engage with Tiffany’s authority in diamonds and colored gemstones on a more intimate level.”

The Dubai event marked Tiffany’s first Blue Book event in the Middle East. Generally in recent months the luxury market has been refocusing its attention on the region, with events and marketing activities particularly anchored in Dubai.

Of this, Ledru said: “Dubai is a city of the future and a city of extravagance…There is a respect for legacy, and a passion for the future, innovation and invention in Dubai — all things that are critical to Tiffany. Our clients in the Middle East are extremely knowledgeable and passionate about the best quality gemstones and diamonds, set in the most intricate craftsmanship and design. While this is the first time we will be showing the Blue Book collection in the Middle East, these markets will continue to be a focus for Tiffany in the future.”

The World’s Fair Necklace is the latest high-profile initiative for Tiffany since coming under the fold of LVMH Moët Hennessy Louis Vuitton. Two weeks ago, the jeweler unveiled a collaboration with streetwear juggernaut Supreme. Increasingly so, Tiffany is putting a focus on its high jewelry designs in ad campaigns and social media posts as a means to elevate its brand resonance. The jeweler has photographed these precious pieces on celebrities like Hailey Bieber and Jay-Z and Beyoncé in ad campaigns aimed at younger shoppers.

Reynolds, who heads up the design and creation of Tiffany’s most valuable designs, said: “I think it actually reinforces our position as the king of diamonds for the past 185 years. There is nothing new about our commitment for selling incredible stones with extraordinary design and craftsmanship. It’s a continuation of an incredible legacy and history…It’s part of our DNA and part of who we will be as we evolve with many exciting things ahead of us.”