Ermenegildo Zegna merges with Investindustrial-backed Spac

Greg Gille
19 July 2021

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Ermenegildo Zegna, a family-owned Italian fashion house, is to merge with a special purpose acquisition company (Spac) sponsored by Investindustrial later this year.

Under the terms of the proposed transaction, Zegna will merge with Investindustrial Acquisition Corp (IIAC), a Spac sponsored by investment subsidiaries of Investindustrial VII; Zegna would become a public company listed on the New York Stock Exchange.

The boards of directors of both IIAC and Zegna have each unanimously approved the proposed transaction, which is expected to close by the fourth quarter of 2021, subject to customary approvals and conditions, and to IIAC's shareholders' vote.

The Zegna family will retain Control with a stake of approximately 62%. The merged entity will have an anticipated initial enterprise value of USD 3.2bn, with an expected market capitalisation of USD 2.5bn.

The transaction is expected to deliver approximately USD 880m in gross proceeds, consisting of IIAC's USD 403m cash held in trust, a fully committed USD 250m PIPE, and approximately USD 225m in a forward purchase agreement with Strategic Holding Group, an investment subsidiary of Investindustrial VII.

The latter will reward Investindustrial with an 11% share in the company. The investment will be subject to a lock-up of up to three years.

Investindustrial said the PIPE element has attracted "strong" interest from a group of institutional investors, including a large commitment by a US-based global asset manager and the participation of several "prominent" names in the luxury industry.

Zegna designs, creates and distributes luxury menswear and accessories under the Zegna brand, and womenswear, menswear and accessories under the Thom Browne brand. Founded as a fabric maker in 1910 by Ermenegildo Zegna in Trivero, Italy, the company is still led by the third and fourth generations of the Zegna family.

UBS Investment Bank is acting as exclusive financial adviser to Zegna, and as co-lead placement agent on the PIPE. Sullivan & Cromwell is acting as legal adviser to Zegna.

Deutsche Bank, Goldman Sachs, SE – Succursale Italiana, JP Morgan and Mediobanca are acting as financial advisers to IIAC. Deutsche Bank, Goldman Sachs and JP Morgan are acting as co-lead placement agents on the PIPE.

Chiomenti and Kirkland & Ellis are acting as legal advisers to IIAC. Shearman & Sterling is acting as legal adviser to the placement agents.