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As Stock Rises, Will Gucci’s Shareholders Punt PPR’s Put?

If Gucci shares continue to rise as they did last week, it could keep Gucci a public firm and save it from becoming a wholly owned subsidiary of PPR.

MILAN — There could be another twist in the Gucci-PPR saga.

Gucci’s share price is on the rise after the Italian company last week issued a very bullish second-half forecast, saying it hasn’t seen such growth since Sept. 11, 2001. If Gucci’s shares continue to rise through March 2004, it could keep the Italian luxury goods group as a publicly listed company and prevent it from becoming a wholly owned subsidiary of Pinault-Printemps-Redoute.

On Friday, Gucci shares closed 1.8 percent higher at 74 euros, or $85.80 at current exchange, after rallying as high as 75.75 euros, or $87.83, in early trading on the Amsterdam Stock Exchange. Volume was well above average. Over a million shares, or about 1 percent of the company, changed hands. On the New York Stock Exchange, where more than 500,000 shares were traded, shares closed up 50 cents, or 0.6 percent, at $85.95 after trading as high as $86.32 during the session.

This compares with the PPR put of $85.52 per Gucci share.

If Gucci remains a publicly listed company, at least two men would be very pleased: Gucci president and chief executive Domenico De Sole and its creative director, Tom Ford, both of whom are requesting autonomy from PPR. As reported, both men are negotiating the terms of their contracts, which expire next year, and De Sole said last week that he hoped a conclusion would be reached by the end of this month.

In an interview with WWD in March, De Sole said he was going to do everything in his power over the next 12 months to ensure that the PPR put didn’t happen.

“PPR must honor their promise, and they will,” De Sole said at the time. “But from day one, everybody — PPR included — agreed we should try to avoid the put on the shares. At the time the deal was made — before Sept. 11 — everyone felt the stock would be way, way above the put price.”

And De Sole added: “Our hope is still to avoid the put. Our wish is that Gucci remains a public company.”

While it is still early in the Gucci share price resurgence — and shareholders by their nature can be a fickle bunch — this is the first time in more than a year that De Sole’s wish doesn’t look farfetched. The spike in Gucci’s share price follows a flurry of analyst reports Thursday that predicted minority shareholders might keep their Gucci shares instead of tendering them to PPR in March, when it must offer $85.52 for each share it does not own. If holders snub the offer, such a move would keep Gucci shares listed and result in a multibillion-dollar savings for PPR. PPR currently holds 67.6 percent of Gucci and it has said it plans to increase its stake to 70 percent by the end of the year.
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