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Kering to Spin Off Puma to Its Shareholders

Luxury goods company Kering on Thursday moved to shed most of its majority interest in the German sportswear company Puma, reports the Wall Street Journal (Jan. 12, Dalton), "announcing a plan to distribute 70 percent of Puma's shares to Kering shareholders." The move leaves Kering focused almost exclusively on luxury goods, completing a strategic shift after years of owning lifestyle and sportswear brands. Without a major stake in Puma, Kering's fortunes will be even more closely tied to the future of its flagship Gucci brand. "Kering executives say the company isn't looking to make acquisitions after the Puma transaction, which Kering will submit to a vote of shareholders in April," notes the newspaper.

According to Reuters (Jan. 12), after Kering distributes 70 percent of Puma's shares to its investors, it will be left with only a 16 percent stake. Puma's stock was down 4.4 percent at the close of trading yesterday as some investors expressed concerns about the company losing such a powerful backer. "The deal comes after a recent turnaround at Puma, which struggled for years following Kering's 5.3 billion euros (US$6.4 billion) purchase in 2007," states the wire service.

Bloomberg (Jan. 12, Williams, Reiter) adds that Kering’s decision disappointed some of Puma's investors, particularly those who had hoped that the French company would find a buyer willing to pay a premium for the shares. "Kering follows rivals in cleaning up its portfolio after LVMH sold Donna Karan and Hermes International divested Leica." The decision to spin Puma off is further proof of a lack of acquisition opportunities in luxury goods in th