Prada sells share in luxury firm

MILAN, Italy -- Italian fashion house Prada has agreed to sell its stake in Fendi, the famed maker of handbags, furs and other fashion items, for $265 million.

Controlling shares in the Italian Fendi has been sold to LVMH, the French luxury goods outfit which already held a 25 percent share, a consulting company for Prada said on Saturday.

The deal, worth nearly 300 million euros, was sealed in Paris, Cristina Fossati, of Image Building, which handles publicity for Prada, was quoted by The Associated Press as saying.

LVMH, Moet Hennessy, Louis Vuitton SA and Prada had each purchased a 25.5 percent stake in Fendi exactly two years ago, and the new deal means the French company is taking the controlling stake.

A Prada statement quoted chief executive Patrizio Bertelli as saying: "We took this decision with LVMH in the spirit of collaboration which has constantly inspired our relations.

"The financial resources generated by this operation will allow the Prada Group to reinforce its development policy, concentrating on brands which it controls as a whole or as a majority."

Prada will get 80 percent of the money for the deal from LVMH before the end of the year and the rest at a date to be decided, Fossati said.

Yves Carcelle, head of LVMH's fashion and leather goods division said in a statement in Paris: "This transaction is a very positive and strategic step and an excellent opportunity for LVMH."

Fendi was long run exclusively by five sisters, whose parents founded the company in 1925 as a small leather-goods business. Fendi's wallets, handbags and furs became fashion statement items in the last few decades.

LVMH includes Louis Vuitton, the luggage and accessory-maker and some of France's best champagne producers,

Prada in the last decade shot to fame with its minimalist fashions, eagerly snatched up in Italy and abroad, but a spree of acquisitions, including ones to gain control of fashion houses like Helmut Lang and Jil Sander, began to weigh heavily on the company's ledgers.

Prada hoped to raise nearly $2 billion in an initial public offering this year but postponed those plans indefinitely because of bearish market conditions.

Fendi had a surge in popularity in 1997 with brisk sales of the "baguette," a soft, slender handbag -- like the French loaf of bread.

Saturday's deal means the Fendi family still retains 49 percent of the company but will no longer be the largest single shareholder.

Prada said that in the last 18 months, the number of directly-held Fendi stores worldwide had soared from four to 83.