Race to buy Jimmy Choo commences: Hony and Michael Kors start bidding

After announcing it was putting itself up for sale, high-end shoemaker Jimmy Choo has started to receive serious interest from potential new owners. News reports point to Michael Kors and Hony Capital as the first bidders.

As reported by ‘Sky News’, Michael Kors would have indicated that it will table an indicative bid for Jimmy Choo, ahead of a deadline later this month. Meanwhile, Hony Capital, the Chinese private equity firm which owns PizzaExpress, is also thought to be likely to make an offer, as is CVC Capital Partners, the former owner of Debenhams and‎ Formula One motor racing.

Another source close to the matter said on Friday that Hony Capital had been holding discussions with Interparfums, the French fragrances group which holds the licence to manufacture Jimmy Choo-branded perfumes, about a joint bid ‎for the company.

Michael Kors is said to be working with JP Morgan on its bid

It’s worth highlighting that the American retailer of high-end clothing and accessories is not going through its best moment, having to cut sales and profit forecasts earlier this year amid declining consumer footfall in US shopping malls.

In this regard, MKM analyst Roxanne Meyer pointed out in a recent market report that Kors might be focusing on the wrong things as it tries to get back on track. “At the core, it’s an innovation problem,” Meyer writes, citing a “slow pace of innovation” at the company, which already doesn’t have enough exposure to “mini bags” and more feminine styles. The company is instead pivoting more toward apparel, shoes, and men’s items, which are also less profitable than handbags, according to Meyer.

But Michael Kors hasn’t been the only luxury fashion heavy weight showing interest in acquiring Jimmy Choo. Back to May, Coach was rumoured to be in the running to takeover Tamara Mellon’s brainchild.

Furthermore, the fact that long-time rival Coach ended up bagging its also coveted Kate Spade earlier this year nothing but added to Michael Kors’ struggles.

In the meantime, Jimmy Choo, said at a trading update last month it was making "excellent progress, trading strongly in the year to date". On this note, the firm added that the fragrance licence managed by Interparfums was "performing particularly well".

Despite Jimmy Choo’s strong commercial performance and brand awareness, there have been concerns about its performance as a public company, with its sales and profit performance disappointing many analysts and investors, point out market sources.

Jimmy Choo has been looking for a buyer since April

In late April, JAB, the German billionaire Reimann family's investment vehicle, revealed its plans to let its luxury holdings go, putting shoemakers Jimmy Choo and Bally International up for sale to focus on the food and beverage operations.

Jimmy Choo’s decision to put itself up for sale was strongly backed by the Board of Directors and its namesake designer and company’s founder, who said to be “supportive of the sales process.”

Back then, the company founded by designer Jimmy Choo and former Vogue accessories editor Tamara Mellon said it was considering a potential sale to "maximise value for its shareholders."

Already in April, Jimmy Choo said Britain's Takeover Panel has agreed that any talks with third parties can be conducted within the context of a "formal sale process". That enables talks with interested parties to take place on a confidential basis. The sale process will be run by BofA Merrill Lynch and Citigroup.

Under UK takeover rules, any agreement to purchase the JAB stake would trigger a mandatory offer for the rest of Jimmy Choo's shares, highlighted sources cited by ‘Sky News’.

Jimmy Choo had a market value of just under 780 million pounds during Friday trading in London.

Photo Credits:Jimmy Choo Official Web