Zegna completes acquisition of TFI, enters license agreement with Estee Lauder

Ermenegildo Zegna (ZGN) announced the completion of its acquisition of Tom Ford International. The acquisition is part of a transaction in which sole ownership of the TOM FORD brand, its trademarks, and other intellectual property rights have been acquired by The Estee Lauder Companies (EL). Before the completion of the acquisition, Zegna Group already owned 15% of TFI, and in this transaction, it acquired the remaining 85%. In connection with the completion of the transaction, Zegna Group has become a long-term licensee of ELC for all TOM FORD men’s and women’s fashion as well as accessories and underwear, fine jewelry, childrenswear, textile, and home design products. Zegna Group will be in charge of the end-to-end TOM FORD FASHION business, from collection creation and development to merchandising, through to production, as well as retail and wholesale distribution. The CEO of TOM FORD FASHION has been appointed and is expected to be announced in July and assume the role in the third quarter of calendar 2023. The leader will be responsible for the end-to-end TOM FORD FASHION business. In the meantime, the operations will continue to be managed by the current management team under the supervision of a new board chaired by Zegna Group Chairman and CEO Gildo Zegna. Zegna Group has acquired the 85% equity interest of TFI that it did not already own. The transaction implies a value for the acquired 85% stake of TFI at $150M, on a cash-free and debt-free basis, assuming a normalized working capital. For the year ended December 31, 2022, TFI had revenues of EUR 312M. TOM FORD FASHION, under Zegna Group, will operate a network of approximately 50 directly operated TOM FORD stores globally. The Zegna Group has entered into a long-term licensing and collaboration agreement with ELC for 20 years with an automatic renewal for further 10 years subject to certain minimum performance conditions. Within the first full year post-closing the transaction is expected to be accretive on Adjusted EBIT for the Zegna Group, though dilutive on Adjusted EBIT Margin3 in consideration of the royalties payable to ELC and other factors.