MILAN, May 28 (Reuters) – Six private equity firms interested in buying a stake in fashion house Roberto Cavalli will know next week how much the Italian designer is willing to sell, sources close to the matter said on Wednesday.
However, there are some doubts as to whether he will go ahead with a sale at all. The suitors include buyout firms Candover (CDI.L: Quote, Profile, Research), Carlyle Group [CYL.UL], Cinven Ltd [CINV.UL] in tandem with Italian businessman Maurizio Borletti, CVC Capital Partners [CVC.UL], Doughty Hanson & Co and TPG Capital [TPG.UL], the sources said. All of the firms declined to comment.
“The due diligence phase will start next week,” one of the sources said. “We are anxiously awaiting (further details).”
Cavalli's advisers Merrill Lynch and Umberto Nicodano, a lawyer at Italian lawfirm Bonelli Erede Pappalardo, are expected to clarify the designer's intentions next week, the sources said.
In an interview with Italian newspaper MF in March, Cavalli said he did not plan to sell a stake in his company at present, despite having hired Merrill Lynch to select possible bidders.
“(Roberto Cavalli) has asked me: 'But why do I need to sell?',” one of the sources said.
The designer is asking for bids to value the company at least at 1.4 billion euros ($2.20 billion), the sources said. The number represents a multiple of 17 times the company's 2007 EBITDA, or earnings before interest, tax, depreciation and amortisation.
Only some of the suitors have indicated a valuation range for their non-binding offers, the sources said, with figures close to 1.4 billion euros.
Others, including private equity firm Cinven, did not give a valuation, preferring to wait for the due diligence phase.
The sources said the high valuation requested and the scarce information on the sale process had discouraged other private equity firms, such as Apax Partners [APAX.UL], Blackstone Group (BX.N: Quote, Profile, Research) and Kohlberg Kravis Roberts & Co [KKR.UL], which had shown interest at an earlier stage.
Candover is being advised by UBS, Cinven by Lehman Brothers, Doughty Hanson & Co by Credit Suisse, Carlyle by JP Morgan and TPG by former Gucci Group's Chief Executive Domenico De Sole, the sources said.
By Massimo Gaia
(Additional reporting by Eleanor Wason in London, editing by Elizabeth Fullerton)