Deal in Focus: Starwood, L Catterton exit Baccarat in €164m deal

Fortune Fountain Capital (FFC) has reached an agreement with US-based Starwood Capital Group and L Catterton (formed by the merger of LVMH and Catterton in 2016) to acquire a controlling stake in the crystal galssware producer Baccarat. FFC is acquiring around 88.8% of the Euronext-listed entity at the price of €222.70 per share, representing a total price of around €164m ($185m). Around 22% of the capital previously belonged to L Catterton, while Starwood held 66.5%, having been invested in the company since 2012 and 2005, repectively.

The closing of FFC's block purchase will be followed by a mandatory tender offer for all the remaining Baccarat shares, subject to the same pricing. Other minority shareholders in Baccarat currently include the Consellior group, led by Allan Green in France, as well as various public shareholders. "The investor is likely to complete a squeeze-out at a later stage, where the minority shareholders will be offered a cash compensation," a source familiar with the matter said. As a result, Baccarat would automatically be de-listed from Euronext.

Launched in 1764, Baccarat is a French luxury brand producing fine crystal glassware used in jewellery, lighting, tableware and ornaments. The business has an artisanal manufacturing plant based in Baccarat, in the French Grand Est region. The company also manages the five-star luxury hotel brand Baccarat Hotels, launched 10 years ago. Baccarat most recently recorded sales of €148m with €13m of EBITDA.

Luxury living
In 2005, Starwood acquired a controlling stake in French holding company Groupe Taittinger, owner of champagne producer Taittinger CVCC and of Groupe Du Louvre – Europe's second largest hotel network at the time, of which Baccarat was a part. Starwood's investment was estimated at €2.1bn and gave it control of 14 luxury hotels, including the Crillon and the Lutetia hotels in Paris and the Martinez in Cannes, as well as the Campanile and Premiere Classe economy hotel chains. Seven years later, L Catterton joined the entity, investing €27.5m in exchange for a 22% stake.

In 2007, the company announced the creation of Baccarat Hotels and Resorts – a five-star luxury hotel brand inspired by the Baccarat brand. Under the current deal, the licence to operate and brand the Baccarat Hotels is retained by Starwood's affiliate Groupe du Louvre. "From Starwood's point of view, selling the Baccarat group made sense – it wasn't really in line with the investor's core business, which is the hotel industry," another source said.

FFC's strategy will now focus on reviving and freshening up the brand, capitalising on the business opportunities that a French luxury brand's image represents on the Asian and Middle-Eastern markets. "We intend to invest and to leverage our business relationships in Asia, to open new market opportunities and to support the next phase of growth for Baccarat," FFC told unquote".

For that purpose, the investor will firstly structure a five-year investment plan with an initial capital injection of €20-30m, supporting a business plan that sets the following targets for Baccarat: international retail amplification, e-commerce expansion to the whole world, the launch of new product lines, and the development of a luxury living concept through restaurants, bars, lounges and hotels. According to FFC: "Our objective is to support the growth of the Baccarat business through expansion in underpenetrated and underdeveloped markets, with an emphasis on product innovation and the development of a luxury living concept."

Daniela Riccardi, who was appointed CEO in 2013, will continue to lead Baccarat. The transaction is subject to regulatory approval in France and China, and should be completed by autumn this year.

People
Starwood Capital Group – Steve Hankin (managing director).
L Catterton – Michael Chu (managing partner).
Fortune Fountain Capital – Coco Chu (chair).

Advisers
Vendor – Messier Maris & Associés (legal); Davis Polk & Wardwell (legal).
Equity – Clifford Chance, Thierry Schoen, Aline Cardin, Xavier Petet, Fabien Goudot (legal); Societe Generale (corporate finance)

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Exits
• Investments
• France
• Consumer
• Top story
• Deal in focus
• France