Fair-Leather Friend

The Gucci Group announced signing a definitive agreement to acquire control of Bottega Veneta, the Italian luxury leather goods company. Under the terms of the agreement, Gucci will acquire a 66.67 percentinterest in Bottega Veneta through a capital increase of $96.2 million and another $60.6 million to purchase the shares from the current shareholders.

Bottega Veneta, founded in Italy in 1962, is known for the high quality of its leather products, particularly its luxury Intrecciato woven leather handbags and accessories. All of the company's design and production activities are based in the Vicenza and Milan areas of Italy.

Vittorio Moltedo will remain as ceo of Bottega Veneta, and will become chairman of the company's board. Creative director Laura Moltedo will continue in her role. Gucci Group said it will work with Bottega Veneta's management to develop the brand's penetration in all of the major luxury markets, through a mix of directly operated stores in key locations and selected luxury wholesale channels. Bottega Veneta currently operates directly 12 stores in the United States, five in Europe and four in Asia. Its Japanese presence is currently managed by a third-party distributor. As part of the agreement with Gucci, this distribution arrangement will be terminated on June 30, at which point Bottega Veneta will take direct control of the distribution and marketing of its products in Japan, including the operation of 19 stores.

Gucci Group N.V., based in Amsterdam but operated out of Milan, already owns such luxury goods companies and brands as Yves Saint Laurent, Sergio Rossi, Boucheron, Roger & Gallet and BEDAT & Co., as well as its own Gucci products. The Group directly operates stores in major markets throughout the world and wholesales products through franchise stores, duty free boutiques and leading department andspecialty stores.