Gucci Parent Kering Taps Defense Advisers as Activist Bluebell Circles

Kering SA is speaking to defense advisers as activist investors including Bluebell Capital Partners Ltd. circle the French luxury group, people with knowledge of the matter said.

(Bloomberg) — Kering SA is speaking to defense advisers as activist investors including Bluebell Capital Partners Ltd. circle the French luxury group, people with knowledge of the matter said.

Bluebell has taken a stake in Kering and recently met company officials, some of the people said. It is seeking improvements at Kering’s Gucci business as well as organizational changes and potential deals, according to the people. 

The French company has been dusting off its defense strategies and preparing to beef up shareholder engagement efforts, they said. Forcing change at Kering could be difficult for any activist, given the Pinault family is the biggest shareholder with a 42% stake and 59.3% of voting rights as of the end of last year.

Kering shares rose as much as 7.7% on Wednesday for their biggest intraday gain in more than eight months. The stock was up 7.5% at 5:18 p.m. in Paris, giving the company a market value of about €65.9 billion. Kering’s stock has heavily trailed rival luxury groups LVMH Moet Hennessy Louis Vuitton SE and Hermes International over the last 12 months. 

Gucci Changes

Kering, led by Francois-Henri Pinault, said Tuesday that Gucci’s chief executive officer will leave the brand as it moves to turn around the previously high-flying Italian label following a slump in its performance.

Gucci sales disappointed in the first quarter, rising just 1% on a comparable basis against analyst expectations of a 2.7% increase. The brand, which sells everything from Double G belts to furry Princetown slippers, accounted for around two-thirds of Kering’s operating profit last year. Kering reports first-half earnings on July 27.

“There’s a lot going on Kering at the moment,” said Ariane Hayate, fund manager at Edmond de Rothschild Asset Management in Paris. “Notwithstanding the management reshuffle, second quarter results are expected to be pretty weak and Kering needs to show real improvement in its results if it wants to re-rate further.”

Corporate Shake-Ups

In its meetings with Kering, Bluebell also brought up the merits of a merger with Richemont, the people said, asking not to be identified because the information is private. Bluebell targeted the Swiss luxury group last year and sought changes to its board and model for shareholder representation. 

Richemont investors ultimately rejected Bluebell’s proposal to add one of its founding partners, former Bulgari CEO Francesco Trapani, to the board. Still, the activist claimed partial victory as the Swiss company granted more influence to Class A shareholders for the first time in more than 30 years.

Johann Rupert, Richemont’s controlling shareholder, said in May that investment bankers had pitched a potential tie-up with Kering two years ago, but “for the record, we said no.” 

In 2021, when it acquired Danish eyewear brand Lindberg, Kering said it wouldn’t rule out transformational M&A. Last month, it agreed to acquire high-end perfumer Creed in a step toward building a powerful position in beauty and fragrances.

There’s “precious little” an activist can do at a family-controlled company, according to Luca Solca, an analyst at Sanford C. Bernstein. “Challenging controlling shareholders in this sector is difficult, as the recent Cie Financiere Richemont example shows,” he said.

New Designs

Bluebell was co-founded by Giuseppe Bivona and Marco Taricco. In recent years, it’s launched campaigns against high-profile companies ranging from French food group Danone SA to Toronto-based cinema chain Cineplex Inc. 

It has also taken positions and pushed for changes at British drugmaker GSK Plc and German chemical producer Bayer AG. Bluebell’s previous targets have often attracted attention from other investors including Elliott Investment Management and Artisan Partners. 

Gucci is weathering a transition after naming Sabato De Sarno as its new creative director in January. The Italian designer, who is joining from Valentino SpA, will unveil his first collection in September at Milan’s Women’s Fashion Week. His clothes won’t be available in stores until early next year.

Read More: TPG-Backed CAA in Talks to Sell Majority Stake to Pinault 

–With assistance from Nishant Kumar, Angelina Rascouet and Julien Ponthus.

(Adds analyst comments in paragraphs seven and 12.)

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