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Bahrain Bank Buys Out Gucci, Puts an End to Legal Wrangle

September 28, 1993|WILLIAM D. MONTALBANO | TIMES STAFF WRITER

ROME — Gucci, for decades a symbol of elegance and chic Italian design, is no longer Italian.

On Monday, Bahrain-based Investcorp ended a tumultuous partnership with corporate scion Maurizio Gucci by buying the half of Gruppo Gucci it did not already own.

The sale of the manufacturer and retailer of luxury clothes and leather goods was announced simultaneously in Milan and in London, where published reports estimated the price at between $150 million and $200 million.

Maurizio Gucci, co-owner and chief executive of a company founded in Florence by his grandfather in 1922, will leave his management post but remain as a senior adviser to the new owners, the company said.

A joint statement from Gucci and the investment bank described the sale as a "friendly and amicable resolution" of a dispute that propelled the two partners into a New York courtroom in July.

Gucci, whose look has been adopted by men and women the world over as a hallmark of "Made in Italy" design and craftsmanship, has been running at a loss for some time. Guccio Gucci, the Italian holding company, says it expects to make a profit this year after reporting a loss of $250,000 last year.

Investcorp, which paid $160 million for half of the company in 1989, subsequently accused Maurizio Gucci of mismanagement. He countered that the bank was interested only in profit at the expense of the company's longstanding tradition of craftsmanship.

Monday's joint statement said the sale will mean a quick end to the legal wrangle.

From Milan, Maurizio Gucci said the company's future is better assured with a single owner. Investcorp, he said, "will provide the financial strength to assure the managerial and marketing expertise necessary to continue restructuring and repositioning of the group, which I initiated a few years ago."

Gucci's grandfather, Guccio Gucci, sprang from humble beginnings as a maker of saddles and suitcases in a Florence workshop to become an icon of the fashion world by the early 1940s.

The firm introduced stylish leather to a place of honor in high fashion that it has held ever since. A pair of Gucci moccasins, for example, went on display at the Museum of Modern Art in New York long before most people had heard of Italian ready-to-wear fashion.

A spokesman for Investcorp said the purchase will mean an infusion of "new capital and liquidity" into the Gucci group, which owns about 60 shops around the world and sells its luxury products under franchise at major stores and airports.

Gucci stores are unfailing magnets for the tourist legions who troop through central Rome, Florence and other major Italian cities. By tradition, Gucci products--from scarves to suits to shoes to pocketbooks--are dispensed by multilingual sales personnel, including Japanese clerks to serve the growing Japanese tourist trade in Italy.

Investcorp, which operates from London and New York as well as Bahrain, a Persian Gulf emirate, is no stranger to the world of international luxury products. Among the bank's investments are holdings in Tiffany and Saks Fifth Avenue in the United States.

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