PPR is a multinational group known and recognized worldwide for prestigious brands like Gucci. In 2007 it decided to make Puma its new prey. Indeed, PPR is a group which is accustomed to growing by acquiring companies in growing and very profitable sectors. The group was gradually built up by these acquisitions. It operates in almost all cases by making a takeover bid, which involves publicly proposing the purchase of a majority stake in the target company. In the case of Puma, PPR acquired the firm in a friendly takeover. The difference is that the leaders of the two companies involved agree on the terms of the merger prior to presenting them to the shareholders.
Puma, a multinational company present in over 80 countries, ranks third among the global sports brands, and brings major advantages for the retail and luxury giant. PPR is interested in companies which enjoy a high reputation, and brand image, and generate profits. This is the case of Puma, which recently became the most profitable company in its sector through differentiation its competitors. It is known for its more conventional and less luxurious design. This expertise has made the company Puma recognized as a "sportlifestyle". All this makes the Puma group an ideal target for investment by PPR but, many parallels which seemed ideal at first sight, failed to work.
It was therefore important to ask whether this friendly takeover bid for Puma allowed PPR to generate the expected benefits in order to recoup the initial investment and continue its international growth strategy. For this, it is necessary to study the approach adopted by PPR. We will start by describing these two complementary businesses while watching their synergies, and analyzing the financial impact of this merger.
The PPR Group has developed in several distinct phases that allowed it to be a group of international renown. The company first started in the wood sector, subsequently moving to specialized distribution and the general public, to finally get into the luxury sector.
Francois Pinault, the founder of PPR Breton, worked with a timber merchant based in Rennes, GAUTIER in the early 60's. At 26, he took the company over from his father. Initially a saw-mill at Trévérien, Ille-et-Vilaine, it developed by buying its competitors, to become one of the market leaders. Pinault was created in 1962, as a company specializing in timber and building materials. In 1976, the company already had 800 employees and a turnover of 600 million francs (about 91 million Euros). To follow his ambition to develop the business, Pinault moved to the Bourse de Paris in 1988.
The first step in the distribution was due to Francois Pinault's desire to build new, more buoyant markets than wood. This change resulted in the creation of Pinault SA, a leader who had anticipated a crisis of overproduction in wood, and increasingly complex regulations aimed at preserving the environment. He decided to acquire CAM in 1990, which included CDME, a distributor of electrical and Private Equipment, a company that rented equipment, and a specialist distributor to the United States.
[...] In Frankfurt, the stock of Puma increased by to 343 Euros, because of speculation about the bid. PPR's offer was therefore considered a "cheap" one according to Deutsche Bank. Small shareholders were invited by the Executive Board of Puma to participate in this process despite their dissatisfaction, because of the redemption price of the share. They were hoping for a revaluation of this offer, which did not happen. This transaction was subject to approval by European authorities, and to customary conditions and regulatory approvals that were issued in June. [...]
[...] 3-Key figures for the group The PPR Group achieved a turnover of 17.9 billion Euros in 2006, which is up higher than that of the previous year. This revenue has largely been achieved outside France ( 55.2 The development of websites of major brands has strongly developed the sales, as it accounts for revenue of 1.6 billion Euros earned via the Internet. This revenue is distributed unevenly between the distribution, which represents of the sales, and the luxury sector which represents only sales. [...]
[...] PPR's share price on March Source: boursorama 12 march 2008 To conclude, Puma has recorded its first positive financial results within the PPR, which should please the leaders of PPR who ran a risk by going into debt for more than 5 billion Euros for this purchase. PPR has extensive experience in terms of mergers and acquisitions, and has been able to foil the bad moments and traps which this kind of financial manipulation can cause. Despite declines in the value of the stock market for both entities, the merger is currently an example of financial success. [...]
[...] Its fame was magnified by the support of several stars of high performance sport as Pele, Maradona, or Boris Becker. In 1986, Puma joined the fellowship of Munich and Frankfurt. Ten years later, the company was listed in the M-Dax German. Only in 2000 the group launched its website which was profitable from the first year. Today Puma is represented in over 80 countries, and had 9204 employees at the end of 2007. Its turnover in 2007 was 2.373 billion Euros. [...]
[...] It is a versatile size for PPR, because by buying more than half the capital of Puma, PPR has taken the reputation, and reinforced its image as a major player in the field of luxury and distribution, areas where it is important to be appreciated and have a very strong reputation World Top 10 brands of sports shoes Rank Brand CA CA Total PDM Evolution of Sales nal balance Ride Source SGI/figures 2006 (In millions In addition, do not forget that Puma is a German brand that allows PPR to expand its international portfolio even further, and at the same time to win power and fame, something that is important for a group like PPR. [...]
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