MILAN, Italy — Domenico Dolce and Stefano Gabbana, the Italian designers convicted of tax evasion, ruled out a public sale of a stake in their namesake fashion company, while leaving open the possibility of bringing in private investors.
“No market, no sales. We want to be free,” Gabbana said in a Bloomberg Television interview in Milan, where the fashion company is based. Asked about selling a stake privately instead of an initial public offering, Dolce added: “You never know.”
The designers also repeated their innocence after being convicted by a Milan court last month over the non-payment of 40 million euros ($52.9 million) of taxes at one of their companies between 2003 and 2004. Authorities ruled that Gado, a Luxembourg-based holding company for Dolce & Gabbana Srl, should have filed tax returns in Italy. Dolce and Gabbana are appealing against the conviction.
“Everybody knows we are innocent,” Gabbana said, ruling out leaving Italy. “We are here. We are strong. We work.”
Luxury buyouts will accelerate as cash-laden companies and investors seek to tap rising demand in fast-growing economies, according to Milton Pedraza, chief executive officer of consultant Luxury Institute LLC. Italian companies are more willing to explore deals because it’s harder for them to secure financing amid the economic crisis, said Francois Arpels, managing director of Bryan Garnier’s luxury-goods practice.
Dolce & Gabbana, which makes 1,450-euro lace shift dresses, has an enterprise value of about 2.5 billion euros, or about 2.3 times 2011 sales, estimates Sanford C. Bernstein & Co. analyst Mario Ortelli. The fashion company would be a good fit for LVMH Moet Hennessy Louis Vuitton SA, which this month agreed to pay 2 billion euros for 80 percent of Italian cashmere clothier Loro Piana SpA, according to the analyst.
An external spokesman for LVMH declined to comment on whether D&G would be a good fit for the French company.
Global luxury sales will rise as much as 5 percent this year as booming demand in Southeast Asia offsets a slowdown in China and Europe, Bain & Co. estimates
By: Andrew Roberts, with assistance from Harris Braude; Editors: Paul Jarvis, Sara Marley