Puma to Be Spun Off By Kering to its Shareholders

France-based Kering, which owns Gucci, is planning to spin off Puma its sports brand in Germany to the conglomerate’s shareholders in order to put more focus squarely on just its luxury brand.

Kering announced Thursday its plans to distribute 70% of shares of Puma to its investors, which would leave only approximately 16% for the company, confirming a report released earlier by Reuters.

Shares of Puma were off 4.4% at Thursday’s close as certain investors were worried the company was losing a strong backer. Stock at Kering closed down 1%.

This deal comes following a recent strong turnaround by Puma, which has struggled for years following the purchase by Kering for €5.3 billion or $6.4 billion.

The French company meanwhile has wanted to place focus mainly on its luxury, high-margin business, where it rivals with larger groups like LVMH the French conglomerate.

Kering’s CFO Jean-Marc Duplaix said that company found itself out of balance due to the outperformance in the luxury sector, adding that the group was also looking at its options to shed Volcom its other sportswear label.

The Pinault family from France owns just slightly over 40% of Kering. The family would receive 29% of Puma, while the free float of the sportswear label would stand at approximately 55%.

The company was keeping a stake in Puma so it can reap some of the benefits from the recovery of the brand, said Duplaix, as Kering is not making any cash gains from this deal.

The price of this transaction, which will go in front of shareholders of Kering in April at the annual meeting of the group, has not yet been determined.

The disposal is likely to give Kering shares a boost, said analysts. The divestiture of Puma has materialized sooner than later and will add to the strength of the stock, said one analyst in Paris.

Under CEO Bjorn Gulden, who was appointed five years ago, Puma refocused on the core sports business that made it such a success after sales fell following a shift into more fashion products.

Puma is third in the worldwide sportswear market trailing leader Nike and runner up Adidas, but is focusing on the most popular sports in the world, like running, motorsport and above all soccer, and tapped into the booming women’s sportswear market by appointing Rihanna in 2014 as its creative director.

Leave a Reply