One of the big events in International mergers this past year was the purchase of Spanish fashion retailer Pepe Jeans by the multinational investment firm, M1 Group, for €900m. Although corporate mergers and acquisitions happen every day, the story of the rise of the little clothing company that began on the streets of London is an interesting one. The competition was tough, but the Lebanese corporation stayed the course over six months of intense negotiations.
Rags to Riches
Pepe Jeans began in 1973 as the dream of three brothers from London; they sold their brand of attire on weekends from a rental stall in the Portobello Road. The quality and popularity of their clothing line spurred steady growth in their little startup, helping it to become an established brand in the 1990s on the London fashion scene; supermodel Kate Moss was just one of the major celebrities to become the face of Pepe. As the business continued to grow in popularity and diversity, adding divisions like Hacket menswear, Italian and Spanish partners came calling.
At the time of the company's purchase by M1, it has expanded to establish a presence in more than 7,000 shops in 60 countries. In its last fiscal year, it achieved a turnover of 500m euros. The bidding over the acquisition of Pepe Jeans was fierce, and was overseen by Morgan Stanley, who acted as an adviser for Pepe. M1 also owns a French fashion retailer, Façonnable.
M1 is an affiliate of Mezcor, an international corporation with diverse interests in such industries as telecommunications, transportation and real estate, and associations in Nigeria, Qatar and New York. They beat out three other major players - PAI Partners, Mayhoola for Investments and CVC - to purchase Pepe from equity partners L Capital, Torreal and Arta Capital, who've owned a majority interest in the company since 2010.
The story of the Pepe Jeans rise from weekend project to International fashion powerhouse just goes to show what you can do with good management, planning and a superior product. Investment professionals become successful by having a talent for picking rising stars in a variety of industries. Such direct foreign investments from multinational firms are quickly changing the landscape in the global economic market. They're expected to continue making a favorable impact on emerging economies around the world.
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