MILAN — Investment fund Fortelus Capital has acquired Bruno Magli SpA, marking a new chapter for the beleaguered footwear company.
U.K.-based Fortelus said it bought 100 percent of Bruno Magli from Bulgari SpA-backed equity fund Opera and its co-investors for an undisclosed sum.
Timothy Babich, who founded Fortelus last year, said he closed the deal to buy Bruno Magli last week. Babich said Bruno Magli’s troubled past is over. He emphasized the “majority of the capital” Fortelus spent on the company will go directly into the Bruno Magli business rather than to the shoe company’s former shareholders.
“I think that part of [the attraction] was the history and the archives of all the designs. We think that there is a good base to build on,” Babich said, adding that it’s premature to discuss strategic objectives for the brand. “We’ve identified some of the things that can help improve some aspects of the business.”
Babich, a former executive at Connecticut-based Silverpoint Capital, said Fortelus is a turnaround fund with $300 million in capital. Bruno Magli, famed for its handmade men’s and women’s shoes, is the fund’s first purchase. He said the fund is looking at other potential investments in Europe.
Opera has had a hard time growing the Bruno Magli business, which it bought from the Magli family in 2001 for a reported $140 million. A well-placed source familiar with the workings of the company lamented that Bruno Magli lacked a clear creative direction and suffered tight budget constraints. In 2005, BM USA Inc., Bruno Magli’s U.S. subsidiary, emerged from bankruptcy, resolving one of the company’s most serious problems.
Babich said Opera already has completed a large portion of Bruno Magli’s turnaround. He also commended consultancy Alix Partners, which has helped manage the footwear firm since 2003.
Bruno Magli has a well-developed retail network, comprising 32 fully owned stores, of which 11 are in Italy and 21 in Japan. The brand also has more than 25 other stores managed through franchise agreements. Overall, Bruno Magli’s distribution reaches 60 countries, Fortelus said in a statement.
Babich said Magli had sales of 45 million euros, or $59.4 million, in 2006. In 2004, Aaron Schwartz, then president of Bruno Magli North America, said the company did about $82 million in annual sales worldwide, with the U.S. accounting for 50 percent.
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Meanwhile, the deal raises questions about the future prospects for Opera.
Once a highly trumpeted mergers and acquisitions player, Opera has a nearly empty portfolio, consisting of furniture group B&B Italia and a minority stake in California-based A.G. Ferrari Foods.
Bulgari owns half of the Luxembourg-based company that manages the Opera fund.
In 2004, Opera announced it had formed a 200 million euro, or $240 million, partnership with Bear Stearns Merchant Banking to pump up its purchasing power. But since then, Opera hasn’t bought anything and opted to sell nearly all of its assets, including yacht maker Itama, furniture company Unopiu and watchmaker Sector Group. Jeweler Morellato bought Sector last year.
Renato Preti, Opera’s founder and managing partner, declined to comment on the Bruno Magli transaction or Opera’s future strategy. The fund has no spokesperson at the moment, making it even harder to communicate with the company. Bulgari chief executive officer Francesco Trapani has been forthright about Opera’s mixed track record on investments, saying the fund has succeeded in the home furnishings arena but faltered with both Bruno Magli and Sector.
In November, Trapani said Bulgari may reduce its stake in Opera. He said the jeweler had started preliminary talks with potential investors, who could take over part of Bulgari’s share in the company.
“It’s not a given that it will happen,” Trapani said at the time, adding that any transaction would have minimal financial impact for Bulgari.