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25 April 2017

Why some deals always catch your eye

Lisa Wright

Yesterday saw the announcement that Jimmy Choo has put itself up for sale, having first cleared its intentions with its Swiss majority owner, Jab Luxury. This deal caught my eye, not because it involves a high-end shoe manufacturer and retailer, but because it is illustrative of the whole M&A life cycle a company might go through.

Historically, companies went through such a "life cycle" over the course of many, many years but in today's fast-moving world, and in the case of Jimmy Choo, it has taken approximately 21 years since Jimmy Choo himself and Tamara Mellon founded the company to have gone through two private equity buyouts, a trade sale, an IPO and whatever else destiny throws at it now it is undertaking this strategic review.

As mentioned, the company was founded in 1996 and the first foray into the world of private equity came in November 2001 when Phoenix Equity partners acquired 50 per cent of the business via Equinox Luxury Holdings, a company set up at the time to explore the strategy of acquiring luxury brands by Phoenix. Having reportedly paid around USD 15m for its share, Phoenix then sold it on in November 2004 for an estimated price of USD 95m to Hick Muse Tate & Furst. Jab Luxury purchased the business in November 2011 via its Labelux subsidiary for a whopping USD 819m, taking the company back into corporate ownership, albeit on a substantially bigger scale than when the founders started the company, and subsequently listed Jimmy Choo on the London Stock Exchange in October 2010.

Now, potentially, the next phase in the company's development is being considered and where does it go from here? While no names are as of yet being linked to the company, you can't help but think it will be of interest to private equity firms and surely the Chinese or other potential Asian buyers who have repeatedly shown they are prepared to pay top prices for the companies behind high-end luxury brands, given the Asian and Middle East consumer appetite for such purchases.

We will have to wait to see what ultimately happens but Jimmy Choo is a text book case of a company going through the full life cycle of corporate M&A.
LIsa Wright

Lisa Wright, Managing Director, M&A products

A regular blogger on this site, Lisa shares her analysis and opinion on news and trends in M&A, private equity, venture capital and IPOs.

A regular blogger on this site, Lisa shares her analysis and opinion on news and trends in M&A, private equity, venture capital and IPOs.

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