Kering defers Valentino buyout to 2028-29, easing balance-sheet strain
Bottom Line Impact
Deferring the Valentino buyout preserves liquidity and reduces near-term leverage pressure, enabling Kering to prioritize margin- and brand-equity accretive investments now, but it postpones diversification and synergy capture until at least 2028-29.
Key Facts
5- Mayhoola's put options on Valentino's remaining 70% move to 2028 and 2029, from 2026 and 2027
- Kering's option to fully acquire Valentino shifts to 2029, from 2028
- Valentino 2023 revenue: €1.3b (-2% at constant FX); EBITDA: €246m (-22%)
- Kering remains a 30% minority shareholder in Valentino from the 2023 deal
- New CEO Luca de Meo targets debt reduction, cost cuts, and brand rationalization, with initial decisions due before year-end
Time Horizons
Key Roles Affected
Executive Summary
Kering has postponed options tied to fully acquiring Valentino, pushing Mayhoola put windows to 2028-29 and Kering's call to 2029, relieving near-term cash outflows amid pressure on sales and leverage. The move buys Luca de Meo time to deleverage, cut costs, and rationalize the portfolio while Valentino works to rebuild EBITDA after a weak 2023.
Actionable Insights
Immediate Actions (Next 30-90 days)
Launch a 90-day portfolio review to identify 1-2 sub-scale brands for restructuring, partnership, or exit, and reallocate opex and capex toward Gucci and Saint Laurent growth drivers.
Rationale: The Valentino deferral frees capacity to focus on margin-accretive turnarounds and high-ROI reinvestment, strengthening cash generation before any 2028-29 outflows.
Role affected:CEO Kering
Urgency level:immediate
Short-term Actions (6-12 months)
Publish a deleveraging framework targeting a 0.3-0.5x reduction in net debt to EBITDA by YE 2025 via opex cuts, working-capital release, and capex prioritization; pre-emptively engage rating agencies.
Rationale: Clear targets and credible levers can compress funding costs and stabilize equity sentiment while option-related liabilities are deferred.
Role affected:CFO Kering
Urgency level:short-term
Drive EBITDA recovery by focusing on leather goods hero SKUs and icon refreshes, raising full-price sell-through and lifting DTC mix by 300-500bps over 12 months; tighten wholesale exposure to key doors.
Rationale: A higher-margin mix and DTC penetration will rebuild EBITDA ahead of 2028-29 option windows, supporting a stronger exit valuation for Mayhoola and a more attractive asset for Kering.
Role affected:Brand President Valentino
Urgency level:short-term
Strategic Actions
Set a 12-month operational value-creation plan with management incentives tied to EBITDA margin expansion of 100-200bps and inventory turns improvement, and explore non-dilutive financing to fund growth initiatives.
Rationale: Elevating profitability and cash conversion before the option windows can secure better pricing outcomes and negotiating leverage.
Role affected:Investment Committee Mayhoola
Urgency level:strategic
Risks & Opportunities
Primary Risks
- Macro softness in China and the US curbs full-price demand, extending recovery timelines
- Cost cuts that impair brand heat risk eroding equity and medium-term pricing power
- Option valuation misalignment in 2028-29 could trigger renewed uncertainty or legal friction
Primary Opportunities
- De-risked near-term balance sheet enables targeted reinvestment in Gucci and retail excellence
- Valentino EBITDA rebuild accelerates, improving exit valuation and strategic fit
- Improved supplier terms and SKU productivity raise gross margin resilience