Gurlove Takshak, Nain Mehta, Jace Zhang

Analysis
Company Overview: Kering
History & Values
Financial Overview Revenue Breakdown
A global Luxury group, Kering
manages the development of a series of
renowned Houses in Fashion, Leather
Goods, Jewelry, and Watches.
• Modern, authentic, and genuine Luxury
• Empowering Imagination
Ambition: To be the world’s most influential
Luxury group in terms of creativity, sustainability,
and economic performance.
Market Capitalization 80.50 B
Enterprise Value 86.52 B
P/E Ratio 24.27
Net Profit Margin 21.29%
Cash on Hand 4.79 B
Price as of Feb 4th,
2022
€652.20
Couture & Leather Goods Watches & Jewelry
Eyewear Shoes
Strategic Direction
Brand Portfolio
Focus on Luxury
Focus on Growth
Focus on Expertise
Focus on the People Within
Focus on Sustainability
Creativity
Audacity
Diversity
fuel the success of Kering’s
Houses and drive their
vision of sustainable and
influential Luxury.

Analysis
Acquisition Needs
“There's the willingness to focus on brands that can have a critical size, a Kering level, being a
multi-billion revenue company.”
Current Activities Acquisition Criteria
With a cash balance of >€3Bn, Kering is considering the acquisition of a major company
Above $1B Sales
Serves Target Market
Scalable Operations
-
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
FY2019A FY2020A FY2021E FY2022E FY2023E FY2024E FY2025E FY2026E
Revenue Forecast YoY
Kering has recently divested out of two of its brand due to revenues not
being in the billions and other factors, so in order to be an adequate
acquisition, the target needs to have a strong revenue forecast
Kering’s target market is consumers who enjoy the luxury lifestyle, so in
order for there to be synergies, the target markets need to be aligned
Kering houses operate worldwide, so the target they acquire must also be
scalable for Kering to launch or continue internationally

Acquisition Target: Moncler Group
Founded in 1952 in Monestier-de-
Clermont, Moncler is a French and Italian
owned luxury fashion brand known for its
skiwear.
• Tradition, uniqueness, quality,
consistency and energy have always
been the distinctive features of the
Moncler brand
Vision: Beyond Fashion, Beyond Luxury
History & Values Group Strategy
Push for Higher Peaks
Bring Other Voices In
Embrace Crazy
Keep Warm
Plan Beyond Tomorrow
New Vision of Luxury
Global Dimension and Unique Positioning
Sustainable Growth and Shared Value
Multichannel Distribution and Communication
Pervasive Digital Culture
Brand Portfolio Business Model
Moncler Collections
Down
The DIST Protocol
Production
Distribution
Marketing & Communication
Brand Protection
Human Capital
Outerwear
Ready-To-Wear
Accessories
Menswear
• In February 2021, Moncler purchased the remaining
30% percent of Stone Island for $419 million,
following the initial deal in December 2020 that
valued the brand at €1.15 billion ($1.4 billion)
Recommendation

Rationale 1: Financial Performance – Post Merger DCF
Post-acquisition leads to a higher market cap and more
synergies to be fostered Target Share Price: €840.37
Recommendation

Rationale 2: Scope of Synergies
Cost Savings
Hard Synergies Soft Synergies
Revenue Enhancements
Revenue Synergy:
$50M in 2024
COGS Synergies:
$663M in 2024
Operational Synergies:
$358M by 2026
Increased Demographic Reach: Millennials and
Gen Z in niche streetwear market
Increased Geographic Reach: 282 stores,
significant presence in East Asia
Increased Omnichannel Capabilities: Utilize
Moncler's distribution networks (retail, ecommerce,
etc.) to increase market reach
Leadership Excellence: Remo Ruffini's vision
and capabilities
Raw Materials Cost Reductions: Moncler faces
higher raw materials costs
Human Capital Optimization: Human resource
synergies, access to top designers
Production: Production facilities throughout Europe
allow for synergies
Sales and Marketing Cost Synergies: Unique
marketing approaches and established brand equity EBIT Increase:
Over $1.09B in 2024
Recommendation

Recommendation
Rationale 3 : Brand Alignment
Sustainability: Moving Towards Sustainable Luxury Core Visions
Product Portfolio
Think Circular
Be Fair
Nurture Genius
Kering’s Pillars for Sustainability
Act on Climate Change
“Born to Protect” Range
100% sustainable
materials
100%
Outerwear Manufacturers
audited on ethical and
social aspects
50% renewable
sources
Electricity
consumption
Responsible decision-making and responsible dealings,
especially with suppliers and clients
Create
Innovative alternatives
Moncler recruits the best talents and invests in
their professional growth and wellbeing.
Low environmental impact solutions to be integrated
into the design and manufacture of its products.
Feeling the responsibility for future generations and
then acting consciously to preserve natural resources
Supporting local communities and building an open and
collaborative dialogue with charitable organizations.
Care
Reducing environmental
footprint
Collaborate
Close collaboration
with stakeholders
Give Back
Kering Current
Popularity in streetwear in
current product portfolios
Moncler Acquisition
Adds to Kering’s current
product portfolio without taking
away from current brands
Does not stray away from
current product offerings while
offering modern and fresh
fashion
Couture & Leather Goods
“With a creative vision that focuses on authenticity and audacity, Kering sets
trends and boldly crafts tomorrow’s Luxury.
A Luxury that is creative, authentic and sustainable; one that offers powerful
and genuine creative content and allows people to assert their individuality.”
“Creativity, uniqueness, passion, and innovation are the driving principles
of the Moncler Group…the concept of luxury going beyond traditional
standards and stereotypes; a moving community, open and engaging, united
by shared experiences and cultural interactions that become the most
authentic form of communication and connection…”

Acquisition Funding
Calculating an Acquisition Price
Acquisition Price: $18.7 B
Acquisition Funding
0
200
400
600
800
1000
1200
FY2024E FY2025E FY2026E
Increase in Unlevered Free Cash Flow YoY
Unlevered Free Cash Flow Projection
Recommendation
Cash on Hand
Issue Equity
Proceeds From
Divestiture
Issue Long
Term Debt
ACQUISITION CAPITAL ALLOCATION

*Areas of Integration: Organization / Processes, HR Culture, Supply Chain Management & Logistics, Purchasing &
Supplier Relations, Production Strategy & Capacity Management, Marketing & Sales
Implementation Timeline
2022 2023
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
PRE-MERGER
Contact Moncler to Express and Interest and
Acquire Financial Statements
Raising Capital
Negotiation Process
Letter of Intent
M&A Due Diligence
Purchase Contract and Confirmation
POST-MERGER
Post-merger Day 1 (Internal/External Launch)
Communication and Change Management to
Staff (Prioritize Retention)
Manage and Realize Synergies*
Evaluate KPIs
Sales/Revenue Increase
(Revenue Synergies)
Gross Profit Margin Increase
(COGS Synergies)
Profit Margin Increase
(Operational Synergies)
Success

Long-Term Implications
Supply Chain & Logistics Synergies
Production Strategy Synergies
Marketing & Sale Synergies
Supplier Relations
Synergies to Leverage and Sustain
It is vital to leverage the supply chain capabilities that arise from the merger
of Kering and Moncler. Moncler being relatively smaller in size should start to
leverage Kering’s processes to mitigate excess costs
In order to maximize production, Moncler, post-merger, should start to leverage
the production capabilities available at Kering to ensure production excellence.
This will lower costs to produce and increase bottom-line margins.
Moncler's pre-existing unique marketing strategies have allowed it to develop a
strong brand presence. Leveraging Kering's resources, Moncler can further
elevate its brand presence, especially for its Stone Island acquisition.
Seeing Kering has many houses (brands) under its portfolio, post-merger,
Moncler should leverage the leather and other raw material providers that
Kering has, in order to increase bottom line revenues and overall margins.
Success

Success
Post-Merger Review
Risk Mitigation
Cannibalization of pre-existing
Kering products
Evaluate product lines of
Kering’s Houses to avoid
overlap during launches
Brand dilution
Maintain Moncler's current
marketing and seasons cycle;
only collaborate with
streetwear lines
Change management failures
leading to high turnover
Conduct cultural analysis to
ease integration of Moncler
staff, re-evaluate resistance and
readiness
Probability
1
2
3
3
2
1
Impact
Low Medium High
Low
Medium
High
Impact
Low Medium High
Low
Medium
High
Risks and Mitigations

Gurlove Takshak, Nain Mehta, Jace Zhang
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Appendix – Discounted Cashflow: Kering

Appendix – Discounted Cashflow: Kering

Appendix – Discounted Cashflow: Moncler

Appendix – Discounted Cashflow: Moncler

Appendix – Discounted Cashflow: Post-Acquisition

Appendix – Discounted Cashflow: Post-Acqiusition