Prada has agreed to increase its stake in the brand’s holding company, Helmut Lang S.à.r.l., to 100 percent by buying the Austrian-born designer’s 49 percent share. Prada bought 51 percent of Lang in 1999. Helmut Lang will continue in his role as creative director.
“Taking complete control of the Helmut Lang Group is a clear demonstration of how strongly we believe in the potential of the brand,” Prada chief executive officer Patrizio Bertelli said in a statement. “We have enjoyed a solid relationship with Helmut over the past several years and look forward to continuing our fruitful collaboration in the years to come.”
Financial terms of the deal were not released.
Prada executives made no other comments on the deal. Sources in Milan said the designer was heavily indebted to Prada and did not have the funds necessary to foot his share of a badly needed recapitalization of Helmut Lang S.à.r.l. Doing so would have allowed him to retain his 49 percent stake of the company that owns the rights to his name.
While some sources acknowledged that owning 100 percent of the business could make it easier for Prada to one day sell the brand, they stressed that finding a buyer would be tricky in today’s market. In any case, Prada has to invest and develop Lang’s business since a healthier Helmut Lang means a stronger component of Prada’s balance sheet. Prada has repeatedly denied speculation that it wants to sell the company.
“The brand’s development was on standby because Lang’s stake was blocking the possibility to make investments,” said one source familiar with Prada and its subsidiaries.
Lang, who will show his spring-summer 2005 collection in Paris on Wednesday, declined to comment beyond his one-line statement in the Prada release: “I am pleased with this development and look forward to continuing my role as creative director.”
Sources indicated the sale of the 49 percent stake had been under discussions since the end of last year, so the deal is not a sudden transaction.
One source close to Bertelli said Prada most likely obligated Lang to ink a long-term contract as collateral for the deal to recapitalize the fashion house. Prada is no doubt eager to avoid a repeat of the situation at another Prada subsidiary, Jil Sander, in which the designer left her namesake label and it floundered until her return a year ago. Her once acrimonious relationship with Bertelli appears to have improved and the two are now working together to grow her business.