Permira in exclusive talks to up Valentino stake

MILAN/LONDON, May 18 (Reuters) Private equity firm Permira said on Friday it was in exclusive talks to up its stake in fashion house Valentino to more than 50 percent, lessening chances of a bid battle with rival Carlyle.

Permira, already the owner of a 29.6 percent stake in the famed Italian gown maker, said it was negotiating to pay 35 euros a share excluding a dividend for another 24 percent, confirming what a source had told Reuters a day earlier.

Should it succeed Permira would have more than 53 percent of Valentino forcing it under Italian law to launch a full takeover of the fashion house best known for dressing stars such as Julia Roberts and Sophia Loren in its floor-sweeping gowns.

Valentino was founded in Rome in 1962 by Valentino Garavani who is still its creative director.

While the world famous fashion house is its best known holding, the Valentino Fashion Group has a wardrobe of brands including Germany's Hugo Boss and Marlboro Classics.

Private equity firms are showing increased interest in the fashion world with no sign of a let up in booming sales of luxury goods in emerging economies like China, India and Russia.

Permira's exclusive negotiations, with shareholders from the Marzotto family, Valentino's majority owners and one of Italy's oldest fashion and textile clans, will expire on May 28.

Valentino shares traded down 3.5 percent at 35.44 euros per share by 0945 GMT as investors saw the prospect of a private equity bidding war ebb.

Fellow private equity firm Carlyle Group also has been angling to buy Valentino, a financial source familiar with the situation told Reuters earlier this week.

The U.S. private equity giant said on Thursday it had not yet made a final decision on whether to bid.

Shares in Hugo Boss rose nearly 3 percent on Friday expectations it now could be a takeover target for Permira.

The Marzotto family, which controls Valentino through several holding companies, including Tidus Srl, PFC Srl, spun off the fashion house in 2005.

Permira in its statement said its negotiations involved the possibility of those shareholders retaking a stake in Valentino should it gain control.

Holding company Canova Partecipazioni, a Valentino shareholder with a 19 percent stake, said in a statement it was staying on the sidelines of the negotiations for time being.

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