Zee Report::Fashion news Benetton family sets buyout price, eyes rejig

The Benetton dynasty will buy out minority investors for 4.60 euros per share in a tender designed to delist the Italian clothing retail group which bears its name and reshape its strategy to restore profitability.

The tender will cost Edizione, the holding company of the Benetton family which owns 67.1 percent of the clothing group, up to 276.6 million euros, Benetton said in a statement, giving no timing for the operation which is not expected to start for at least a month.

The bid price represents a 15.6 percent premium on Tuesday's stock price -- when the plan to delist was first announced. The shares have been suspended since then.

The maker of colorful wool sweaters, one of Italy's best known brands with stores in 120 countries, is managed by vice chairman Alessandro Benetton, son of the group's founder Luciano.

An industry source said Alessandro is set to formally take over the helm of the group in May this year. The buy-out would give him more wiggle room for possible asset disposals or alliances and help rejig the group to accommodate other family members, the source said.

Benetton said in Wednesday's statement that the share tender would give management a freer hand in running the group in the face of lower margins, higher raw material costs and weak consumer demand.

Retailers across Europe are struggling as disposable incomes are squeezed by rising prices, muted wage growth and austerity measures, and as shoppers worry the euro zone debt crisis could drag the world back into recession.

Clothing chains like Benetton have also been hit by unseasonably warm weather in many markets, the rising cost of raw materials like cotton and cut-price competition from fast-growing discount specialists like Britain's Primark (ABF.L).

The group has warned its 2011 profits will plunge 30 percent and that 2012 will be difficult.

Benetton shares lost 40 percent of their value in 2011 and last month dipped below 3 euros, a far cry from levels of over 15 euros reached in 2006.

The stock rallied more than 20 percent on Monday and Tuesday, before the suspension, prompting a probe by market watchdog Consob on whether information about the share tender was leaked ahead of time.

Benetton has 6,400 stores worldwide, but is heavily reliant on its austerity-hit home market.

The Benetton family holding company, Edizione, is one of Europe's largest, with interests ranging from clothing to highways to the Autogrill airport retailer.

(Reporting By Silvia Aloisi, Paola Arosio and Stephen Jewkes; Editing by Tim Dobbyn)

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