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Puma shares slump as luxury group Kering plans spin-off

Reuters  |  PARIS/BERLIN 

By and Emma Thomasson

PARIS/(Reuters) - tumbled on Friday after French parent said it would the German sportswear group to its shareholders and focus solely on its luxury fashion and jewellery labels.

Kering, whose brands range from Gucci to Yves Saint Laurent, plans to distribute 70 percent of to its own investors, retaining only a 16 percent stake in a business which is finally making strides after 10 years under its ownership.

Investors initially welcomed Kering's long-awaited move to shed its remaining non-luxury brands, sending its to record highs. They later retreated to trade down 0.5 percent.

fared worse, slumping at one stage by 15 percent to nine-month lows. They were down 5.5 percent in mid-day trading, and analysts at Lynch downgraded their rating to "underperform" from "buy".

Some investors had hoped - with a 5 billion euro ($6 billion) market value, just below the price tag bought it at in 2007 - might be sold at a premium and acquire another strong backer.

"The market is disappointed as it wanted an outright sale," a said.

- controlled by France's family, which would end up with 29 percent of after the through its Artemis holding - had been expected to shed the German label this year now that it is in recovery mode.

A distant third in the global sportswear market behind and local rival Adidas, has refocused on popular sports such as soccer, running and motorsport after struggling for years.

It named as in 2014, seeking to tap into booming sales of women's sportswear, and recent footwear collections have done well, helping increase its profit guidance three times last year.

An upturn in the luxury goods industry, meanwhile, underpinned by a revival of Chinese demand, has boosted Kering's fashion brands, and analysts said many of these, including Balenciaga, had strong potential.


managers said the group had preferred to avoid a drawn-out disposal of to a third party, though the German firm said there had been interest from buyers.

"There were a load of interested parties," told reporters on a call on Friday.

"But for us this is the best option."

Rothschild and boutique d'Angelin advised on the deal, while advised Puma, sources familiar with the matter said.

"A was the only way could participate in the further potential upside of Puma," a person close to the situation said, adding no formal sales process had gotten underway.

Gulden said could make faster decisions as an independent company than as a subsidiary of another firm.

The deal will increase Puma's free-float to around 55 percent from 14 percent now, which some analysts also deemed a positive, as it makes it easier to buy and sell the

"We welcome this development, which if approved by shareholders, will increase Puma's free-float making it investable again for the first time in around 10 years. At the same time, will be now able to focus purely on its luxury goods business, where we continue to see value," analysts at brokerage Berenberg wrote in a note.

rivals larger groups such as France's LVMH, owner of Louis Vuitton, though until recently it traded at a discount to luxury peers in terms of forward earnings (see graphic). A stellar performance at Gucci has helped it catch up.

had already rid itself of such as CD and book business and

Its skatewear label Volcom, acquired in 2011 for $608 million, will now also likely be on the block.

($1 = 0.8260 euros)

(Reporting by Sudip Kar-Gupta and in Paris, Emma in Berlin, Helen Reid in London and Arno Schuetze in Frankfurt; Additional reporting by Thyagaraju Adinarayan; Editing by and Mark Potter)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, January 12 2018. 18:24 IST