Kering’s Acquisition of 30% of Valentino – the Corrupting Power of Unchecked Ambition. Story by Eleonora de Gray, Editor-in-Chief of RUNWAY MAGAZINE.

Lets’ start from this: Macbeth —the destruction wrought when ambition goes unchecked by moral constraints.

Introduction

July 27, 2023, Kering, the French luxury conglomerate leaded by Francois-Henri Pinault, has announced its agreement to acquire a 30% stake in the luxury Italian fashion house Valentino. The acquisition, valued at 1.7 billion euros in cash, comes from Qatari investment fund Mayhoola, which is positioning itself as a strategic partner for Kering in the future development of the Maison de Couture. The agreement also includes an option for Kering to take full control of Valentino by 2028.

“Kering and Mayhoola enter into a binding agreement for the acquisition by Kering of a 30% shareholding in Valentino, for a cash consideration of €1.7 billion. The agreement comprises an option for Kering to acquire 100% of the share capital of Valentino no later than 2028. The transaction is part of a broader strategic partnership between Kering and Mayhoola, which could lead to Mayhoola becoming a shareholder in Kering,” – Kering press-release.

See Press-Release HERE

This strategic acquisition couldn’t come at a more crucial time for Kering, as its powerhouse brand Gucci has been experiencing challenges in recent years, with sales rising only a meager 1% year-on-year. And Balenciaga after total destruction of brand identity and controversial publicity campaigns dramatically lost revenue.  As Gucci represents 50% of Kering’s group revenue and two-thirds of its operating profit, fixing its struggles becomes paramount for Kering’s success in the future. After firing creative director Alessandro Michele as a present for his birthday, and the untested appeal of the new chief designer Sabato De Sarno, Kering faces uncertainties in reviving Gucci’s once-soaring performance.

“Kering will become a significant shareholder with Board representation. Mayhoola will remain the majority shareholder with 70% of the share capital and will continue to execute on the successful brand elevation strategy. As part of the broader partnership, Kering and Mayhoola will explore potential joint opportunities in line with their respective development strategies. The transaction is expected to close by end of 2023, subject to clearance by the relevant competition authorities,” – Kering Press-release.

1.7 billion euros in cash

The acquisition of Valentino’s stake is a clear first step in Kering’s larger strategy to ultimately own the entire brand. While Kering’s intention is evident, the exact timing and conditions of the transition remain uncertain. Nonetheless, with Kering set to become a significant shareholder with board representation in Valentino, it marks the beginning of an important partnership between the two luxury giants.

Mayhoola’s CEO, Rachid Mohamed Rachid, expressed enthusiasm for the partnership, highlighting Valentino’s status as one of the ultimate Italian luxury authorities. As Mayhoola remains the majority shareholder with 70% of the share capital, the collaboration seeks to reinforce Valentino’s brand and explore potential joint opportunities in line with their respective development strategies.

Rachid Mohamed Rachid, CEO of Mayhoola and Chairman of Valentino, highlighted: “Valentino is one of the ultimate Italian luxury authorities and we are very happy to welcome Kering as a strategic partner for the future development of the Maison de Couture. 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. We look forward to our partnership with Kering in Valentino and also in other potential opportunities to explore investments together.”

The deal also provides Mayhoola, a Qatari royal family entity, an entry point into the luxury giant and sets the stage for potential further joint investments with Kering. Mayhoola’s long-term investment approach in the luxury industry includes ownership of other notable brands such as Balmain, Pal Zileri, and Beymen.

By reducing its reliance on Gucci and diversifying its portfolio with the addition of Valentino, Kering aims to strengthen its position in the luxury market. As Gucci’s growth lags behind competitors like LVMH, the acquisition comes as a strategic move to secure Kering’s place as a leading player in the fashion world.

Epilogue

Let me draw this short like a picture: the Qatari royal family, Thani dynasty, wants to enter the European Luxury market, and oppose LVMH (luxury group, who owns Louis Vuitton, Dior etc). There are some Luxury Groups worth considering like Capri Holdings Limited (founded by Michael Kors), subsidiaries: Versace, Jimmy Choo, Michael Kors, or Richemont luxury group, subsidiaries: Cartier, Chloé, Montblanc, Van Cleef & Arpels, Delvaux and many others. There are some choices. 

Kering, owned by Francois-Henri Pinault, shouldn’t be one of them. Who would want to get shares in this company?

Why?

Not like any other luxury group Kering is a group who destroys the brands, destroys the identity and historical heritage of the brand. I always have a question unanswered: why buy a haute couture brand with a beautiful history, with a royal list of clients, and turn it into a garbage truck? Examples? Gucci and Balenciaga. 

I never liked Gucci. Family affairs, killings among family for the heritage and money are totally not my thing. These events have blood stains all over the brand. But let’s give it a credit – Gucci bags, sneakers and sunglasses always worked. Choice of previous artistic director Alessandro Michele didn’t do any better. Maybe at some point it was a hit for the trend. Just ones. That’s all about it. So no wonder there are still the same classic Gucci bags, sneakers and sunglasses we know from the 50s-60s filling the accounts of Gucci with cash.

And on top Francois-Henri Pinault is the one who unleashed counterfeit pandemic on the world by releasing, and promoting counterfeit goods tailor Dapper Dan from Harlem. He simply invested in Dapper Dan, gave a very large sum for the promotion to known fashion magazine and TV channel, including the fashion federation in the USA. Did it work? Not really, no…. Read the full story HERE.

Now if Francois-Henri Pinault will get Valentino, give it a couple of years and you’ll see some horrors, perversity and ugly trash bags. And it feels sad. Valentino Garavani is still with us… Last year he transferred his heritage to Pierpaolo Piccioli, with the hope that elegance and grace of his house will continue. But would it with Francois-Henri Pinault? Would he even keep Pierpaolo Piccioli as an artistic director in 2028? Elegance and grace is not really in Francois-Henri Pinault style. And it’ll be all the same …. 

So this is my prediction for Maison Valentino under Kering rule: by 2028 it’ll be another dumpster with trash bags as accessories, worn by pierced models with broken teeth.

End of another beautiful story…