Gucci-owner Kering plans to spin off German sports brand Puma to the French conglomerate’s shareholders to focus squarely on its luxury brands.
Kering said on Thursday This specific planned to distribute 70 percent of Puma shares to its investors, leaving This specific with only a 16 percent stake, confirming an exclusive Reuters report.
Puma shares were down 4.4 percent at the close as some investors worried about the company losing a powerful backer. Kering stock was down almost 1 percent.
The deal comes after a recent turnaround at Puma, which struggled for years following Kering’s 5.3 billion euros ($6.4 billion) purchase in 2007.
The French firm, meanwhile, has long wanted to focus purely on its high-margin luxury business, where This specific rivals larger groups such as French conglomerate LVMH.
“We found ourselves in a sort of imbalance, linked to the outperformance of the luxury sector,” Kering’s finance chief Jean-Marc Duplaix told journalists, adding the group could also look at options to shed its remaining sportswear label, Volcom.
Kering will be a little more than 40 percent controlled by France’s Pinault family, which could receive about 29 percent of the sporting goods company, while Puma’s free float could stand at about 55 percent.
The French company was retaining a stake in Puma to reap some benefits coming from the brand’s recovery, Duplaix said, as Kering will make no cash gains coming from the deal.
The cost of the transaction, which will be put to Kering shareholders in April at the group’s annual meeting, has yet to be determined, he said.
The disposal was likely to be a boost for Kering shares, analysts said.
“The Puma divestiture materializing sooner – rather than later – will add oomph to the stock,” Exane BNP Paribas analyst Luca Solca said in a note