Why did a car importer buy Moleskine?

Moleskine notebooks have fired the imaginations of would-be Hemingways, but even some struggling novelists might not have imagined their maker being taken over by a Belgian car importer.

D’Ieteren NV is buying a 41% stake in the Milan-based stationery maker and will make a bid for the remainder. That would put the maker of $45 notebooks in the hands of a family-owned business that began with a wheel-making plant Jean-Joseph D’Ieteren started in 1805. Moleskine shares surged 13% and D’Ieteren declined as much as 7.3%.

Just as Moleskine notebooks are often bought with romantic aspirations by those who dream of sketching one’s way to becoming the next Picasso, the bid has some analysts wondering if the Belgian company’s purchase isn’t a flight of fancy away from its main business. D’Ieteren ranks as Belgium’s No. 1 Volkswagen distributor and the owner of the world’s largest maker of car-repair glass.

“It slightly raises the risk profile of the group,” wrote Emmanuel Carlier, an analyst at ING in Brussels who says investors will value D’Ieteren shares lower because it’s becoming a holding company. The shares will be “volatile in the coming days as this is a transforming deal.”

“It will admittedly be seen as a contrarian move to many,” wrote David Vagman, an analyst at KBC Securities. “However, in our view, D’Ieteren management has delivered a solid deal from a financial point of view.”

The 2.40 euro-a-share purchase is only an odd fit “for somebody who doesn’t follow us closely,” says D’Ieteren spokeswoman Pascale Weber in a telephone interview. Moleskine “checked all the boxes” regarding strong fundamentals for long-term growth, she says, adding the company set out its investment priorities in December and says at the time purchases wouldn’t necessarily be car-related.

Pascale called Friday’s drop in D’Ieteren’s share price “negligible.”

“D’Ieteren is controlled by a family, and they take a long-term view,” she says. “And now they really want us — the corporate team — to prepare the company for the next generation.”

Moleskine was founded in 1997, resurrecting the design of its Tours, France-based predecessor, which went out of business in 1986. The design was inspired by descriptions from the travel writer Bruce Chatwin.

Moleskine shares traded at 2.43 euros at 2:51 p.m. in Milan, higher than the offer price. Pascale says that won’t pose a problem.

“Our price is 2.40, and that’s it,” says Weber. “We hope to get 100% of the shares; if it’s less, it’s not the end of the world for us.”

The takeover bid is the first step toward diversification at D’Ieteren, according to Matthijs Van Leijenhorst, an analyst at Kepler Cheuvreux. The purchase will contribute to D’Ieteren’s profit immediately and help add long-term growth prospects as the Belgian car market gets saturated, he says.

“There are too many cars in Belgium,” the analyst says. “The country is one big traffic jam.”

By Thomas Seal for www.bloomberg.com

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