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Will a major acquisition send tremors through the luxury sector this year?
To be sure, all eyes will be on François-Henri Pinault as the chief executive officer and chairman of the board of PPR looks to divest its European retail businesses to focus exclusively on consumer and luxury brands Gucci, Yves Saint Laurent and Puma. Two properties on the block are furniture chain Conforama and Fnac, a books and electronics seller, but there are no details or a time frame for selling them.
Analysts have estimated the two units could yield about 4 billion euros, or $5.72 billion at current exchange, which PPR is expected to use to shop for apparel and accessories brands in a move to create a new mass market division mirroring the luxury goods unit, Gucci Group. In recent years, Pinault has kicked the tires at brands including Salvatore Ferragamo and Tiffany, according to market sources.
"We believe the main valuation driver for PPR remains portfolio restructuring," Merrill Lynch analysts Antoine Colonna and Rodolphe Ozun noted in a recent report on the French conglomerate. "Our base case scenario assumes no further transformational deal." The investment firm assumes a "material recovery" of the Gucci brand in coming months and considers PPR's exposure to the "more volatile sports lifestyle segment" among risks to its stock price.