Each week, Just Style’s editors select a deal that illustrates the themes driving change in our sector. The deal may not always be the largest in value, or the highest profile. But we select it because of what it tells us about where the leading companies are focusing their efforts, and why. We pick apart the deal itself, and the industry theme behind it. This new, thematic deal coverage is driven by our underlying Disruptor data which tracks all major deals, patents, company filings, hiring patterns and social media buzz across our sectors.

Inside the Kering-Mayhoola Valentino deal

Luxury fashion conglomerate Kering Group has entered into a binding agreement with investment entity Mayhoola following its 30% shareholding of Italian luxury fashion house Valentino, which amounts to a cash consideration of €1.70bn ($1.87bn).

As part of the deal, Kering will become a significant shareholder with board representation. While Mayhoola will remain the majority shareholder with 70% of the share capital and will continue to execute its successful brand elevation strategy.

The agreement leaves Kering with an option to completely acquire Valentino in the next five years.

Kering describes this transaction as part of a broader strategic partnership between the two organisations with Mayhoola suggesting it could lead to other potential opportunities to explore investments together in line with their respective development strategies.

The strategic partnership will further support the brand elevation strategy implemented by Valentino CEO Jacopo Venturini under the ownership of Mayhoola, which Kering says has turned it into one of the “most admired luxury houses in the world”.

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The transaction is expected to close by the end of 2023, subject to clearance by the relevant competition authorities.

Here’s why the deal matters

Over a decade ago in July 2012, Mayhoola, a fund controlled by the Qatari royal family, signed a deal to buy Valentino for an estimated €700m ($853.7m).

Valentino at the time was under Red & Black, a company controlled by Permira Funds and the Italian textile group Marzotto.

A Mayhoola spokesperson shared that the vision behind this acquisition was to back management for the long term to exploit the full potential of Valentino.

The spokesperson said at the time: “Valentino has always been a brand of unique creativity and undisputed prestige. We believe Valentino is ideally suited to form the basis for a global luxury goods powerhouse.”

Eleven years on and both Mayhoola and new partner Kering agree this vision has become a reality.

Mayhoola CEO and chairman of Valentino Rachid Mohamed Rachid declares: “Under our stewardship, Valentino has strengthened its foundations as a highly desirable luxury brand and we will keep reinforcing the brand in the next chapter with Kering.”

Meanwhile, François-Henri Pinault, Chairman and CEO of Kering, adds: “I am impressed with the evolution of Valentino under Mayhoola ownership and very delighted that Mayhoola has chosen Kering as its partner for the development of Valentino, a unique Italian house that is synonymous with beauty and elegance.”

Kering already boasts its own luxury brand portfolio that includes Italian luxury fashion houses Gucci and Bottega Veneta as well as French luxury fashion house Saint Laurent and Spanish-born luxury fashion house Balenciaga.

In 2018 Kering’s sales were mostly driven by its flagship brand Gucci’s strong performance. In mid-2019 Gucci’s sales growth experienced a slowdown which turned into a slump, however in 2021 Kering’s total revenue bounced back but this was not attributed to its flagship Gucci brand.

At the time a GlobalData apparel analyst Darcey Jupp suggested Gucci was struggling to capture the ever-evolving fashion trends it once had a grasp of, and added: “While Gucci still accounted for 52.1% of Kering’s revenue, a change in direction may be needed.”

Following the news of Kering’s 30% shareholding in Valentino, GlobalData apparel analyst Louise Deglise-Favre tells Just Style Kering’s ongoing struggle with Gucci could be motivation for it to take full ownership of the “successful” Valentino brand.

She explains it is still uncertain if Kering plans to fully acquire Valentino in the next five years, but she says: “This partial acquisition by Kering is a good strategic move given Valentino’s high desirability among consumers.”

“Kering will be able to capitalise on Valentino’s success while further strengthening its position as a luxury conglomerate.”

Deglise-Favre also points out that Mayhoola will most likely expect a “pretty penny” for Valentino which Kering might not be willing or able to pay.

However, Kering’s Pinault is very pleased with the first step of Kering’s collaboration with Mayhoola to develop Valentino and pursue what he describes as a “very strong strategic journey of brand elevation that Jacopo Venturini will continue to lead.”

Key takeaways for the fashion industry

According to Reuters Valentino’s total revenue in 2022 increased by 10% at constant currencies with the luxury brand reporting preliminary revenue of €1.42bn ($1.56bn) last year.

This demonstrates Mayhoola’s strategy for Valentino is proving to be financially successful based on its performance.

With Kering’s luxury brand expertise, there is no doubt that both Kering and Mayhoola will be able to leverage each other’s key strengths.

For example, in July 2021 GlobalData’s Jupp highlighted Kering’s credibility in bringing its Balenciaga brand back to haute couture after a 53-year hiatus. This, Jupp said: “Proves that Balenciaga is a leading innovator in the luxury market, and Kering should encourage its more traditional brands to follow suit to remain competitive against LVMH to ensure continued growth.”

In a recent GlobalData webinar titled Key Trends in the Global Apparel Market, head of apparel at GlobalData, Chloe Collins points out luxury shoppers are less prone to financial challenges.

She shares that luxury accessories have performed outstandingly well in recent times, as affluent luxury shoppers have remained relatively resilient during rising inflation.

Collins adds: “We expect that luxury will be the fastest growing price segment within the global apparel market. With its share growing from 9.2% in 2022 to 11.4% by 2027.”

Both Kering and Mayhoola have a history of building strong luxury brands so this Valentino partnership could be the perfect opportunity for them to show the world the power of their joint strength and to use the luxury market’s resilience to take Valentino to the next level.

More research:

Apparel Industry Mergers and Acquisitions Deals by Top Themes in Q1 2023 – Thematic Intelligence

Global Luxury Apparel Market & Forecasts to 2025