PPR Is Not Interested In Prada

PPR SA (PP.FR) is not interested in buying luxury company Prada S.p.A., a person familiar with the matter told Dow Jones Newswires Tuesday.

The French business daily La Tribune in its Tuesday edition said PPR was considering a large acquisition in the luxury sector according to a source in the company, citing Prada, as well as Hugo Boss (BOS.XE) and Burberry PLC (BRBY.LN) as likely targets.

A recent rebound in luxury consumption, as well as LVMH Moet Hennessy Louis Vuitton SA's (MC.FR) current EUR4.3 billion acquisition of Italian jeweler Bulgari (BUL.MI), has sparked interest in the sector.

PPR Chief Executive Francois-Henri Pinault said at the company's annual shareholder meeting last month that he is interested in making an acquisition in the luxury sector, but stressed that he would be targeting medium or modest-sized companies with potential for international growth.

In describing the kinds of luxury companies PPR might target, Pinault mentioned brands the company already owns, like Balenciaga, Yves Saint Laurent or Bottega Veneta. He said Bottega Veneta's annual sales were around EUR35 million when it bought the company in 2001, but last year increased to over EUR500 million.

Brands with a "certain degree of maturity" are less attractive than "a smaller brand we feel has high potential," Pinault said at the time.

That would rule out British luxury company Burberry, which has a market capitalization of around GBP5.77 billion. Hugo Boss is also an unlikely target as it is majority-owned by private equity firm Permira who told German daily Suddeutsche Zeitung it wasn't in a hurry to sell its stake in the fashion house, and plans to push the brand's growth in the U.S.

Prada is set to be the first Italian company to list in Hong Kong, and is planning to raise up to $2.6 billion in an initial public offering ahead of listing on June 24, according to a person familiar with the matter.

PPR is shedding its retail assets and seeking to bulk up its portfolio of luxury brands and sports brands around its key luxury label Gucci and sportswear brand Puma (PUM.XE). PPR recently launched an offer for the U.S.-based skate and surf apparel group Volcom Inc. (VLCM), in a deal worth $608 million.

Analysts at Citigroup estimated PPR's potential cash for acquisitions at between EUR1 billion and EUR5 billion once the company sells its remaining retails assets - the electronics retailers Fnac, catalogue business Redcats, and a stake in the African distributer CFAO (CFAO.FR). PPR has said however that it is not in a hurry to sell the remaining retail assets and will take the time to do so at the right price.

As for further potential acquisitions in sport and lifestyle brands, finding potential acquisition targets is more complicated, Pinault said. "The question is what brands have true legitimacy," given the enormous number competing in that sector," he said.

At 0914 GMT, PPR shares traded down 0.3% or EUR0.35 to EUR117.05, underperforming the Paris CAC-40, up 0.5%.

-By Mimosa Spencer, Dow Jones Newswires; +33 1 40 17 17 73; mimosa.spencer@dowjones.com

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