Zegna, Italian luxury firm, to list in $3.2bn SPAC deal

Italian luxury house Ermenegildo Zegna Group and Investindustrial Acquisition Corp. (IIAC), a special purpose acquisition corporation (SPAC), announced an agreement that is expected to make Zegna a public company listed on the New York Stock Exchange later this year.

Based on the transaction value, the merged entity will have an anticipated initial enterprise value of $3.2 billion with an expected market capitalization of $2.5 billion.

Zegna Group CEO Gildo Zegna said: “Over 111 years ago, my grandfather and namesake founded Zegna with the belief that caring for both the natural environment and for people was the bedrock for creating the finest textiles and a successful brand.

“Since then, we have proudly followed in his footsteps to become one of Italy’s true luxury houses.

“Today’s announcement underscores the success of our strategy of continuously focusing on the group’s brand equity while also continuing to build upon our heritage, our ethos of sustainability, and the unique craftsmanship that has made our name synonymous with quality and luxury around the world.

“The Zegna family will remain at the company’s helm following the transaction’s completion, and we will continue to invest in creativity, innovation, talent, and technology in order to sustain Zegna’s leadership position in the global luxury market.”

While the Zegna brand remains the group’s flagship label, in 2018 Zegna acquired a majority stake in American luxury fashion brand Thom Browne.

The Zegna family will continue to control the company with a stake of 62% upon closing of the transaction, expected to occur in the fourth quarter of this year subject to customary approvals and conditions and to IIAC’s shareholders’ vote.

Andrea Bonomi, founder of Investindustrial and chairman of the Industrial Advisory Board, said: “For over thirty years, Investindustrial has invested in and supported both growing and leading Italian brands.

“We believe in the strength of Made in Italy, which has always been recognized worldwide for quality, craftsmanship, and innovation.

“With Zegna we identified a group that also includes both a strong family heritage and a leading position in sustainability – one of the pillars in Investindustrial’s investment strategy.

“We are supporting the Zegna Group with a long-term commitment and a significant investment to back the company’s ongoing expansion and growth, with the goal of spreading Zegna’s unparalleled heritage and luxury craftmanship more broadly to customers around the world.”

Sergio Ermotti, chairman of Investindustrial Acquisition Corp, said: “Our special purpose acquisition corporation was created for transactions like this one: taking public a well managed company with strong fundamentals and growth potential like Zegna.

“Our goal now is to support Zegna in this important new chapter of its history while opening the opportunity to the public to invest in one of the last great iconic independent luxury brands.”

IIAC has entered into a definitive agreement to combine with Zegna with a combination of stock and cash financing.

“The transaction is expected to deliver approximately $880 million of gross proceeds, consisting of IIAC’s $403 million cash held in trust, a fully committed $250 million PIPE – which, in light of strong investor demand, was upsized by $50m vs the original target amount – and approximately $225 million in a forward purchase agreement with Strategic Holding Group S.à.r.l., an independently managed investment subsidiary of Investindustrial VII L.P. (SSH),” said Zegna.

“Under the forward purchase agreement, SSH will invest approximately $225 million which, together with relevant sponsor promote shares, will provide them with circa 11% of the company.

“SSH’s investment will be subject to a lock-up of up to three years, demonstrating their strong commitment to the company and alignment with the Zegna family.

“The PIPE has attracted strong interest from a diverse group of high profile institutional investors, including a large commitment by a leading US-based global asset manager.

“The PIPE saw the participation of several of the most prominent names in the luxury industry, alongside the support of members of Zegna’s board of directors and the group’s executives.

“The combination of the investors participating in the PIPE and IIAC shareholder register provides a well diversified and high profile investor base which will help consolidate Zegna’s success in the public equity markets.

“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.”

PIPE means a private investment in public equity.

UBS Investment Bank is acting as exclusive financial advisor to Ermenegildo Zegna Group with a team led by UBS Italy Country Head Riccardo Mulone, and as co-lead placement agent on the PIPE.

Sullivan & Cromwell is acting as legal advisor to Ermenegildo Zegna Group.

Deutsche Bank, Goldman Sachs Bank Europe, SE – Succursale Italiana, JP Morgan Securities Plc and Mediobanca are acting as financial advisors to Investindustrial Acquisition Corp.

Deutsche Bank, Goldman Sachs & Co.LLC and JP Morgan Securities Plc are acting as co-lead placement agents on the PIPE.

Mediobanca is providing a fairness opinion to Investindustrial Acquisition Corp.’s board of directors.

Chiomenti and Kirkland & Ellis are acting as legal advisor to Investindustrial Acquisition Corp. Shearman & Sterling is acting as legal advisor to the placement agents.