Tod’s’ shares rose by 11.39 percent to €39.32 in trading on the Milan exchange on April 23 after the announcement that LVMH would increase its stake in the Italian footwear company to 10.0 percent, a move analysts believe could be a prelude to an eventual acquisition.

Tod’s’ chairman Diego Della Valle agreed to sell LVMH 2.25 million shares, or a 6.8 percent stake, at a price of €33.10 per share, corresponding to the average weighted price of Tod’s shares in the 15 trading days prior to deal closing. The €74.5 million transaction will be carried out on April 28 and will leave LVMH, which already owns 3.2 percent in Tod’s, with a 10.0 percent stake.

Della Valle, who has been a director on the LVMH board for years, said the deal consolidates the 20-year relationship between his family and the Arnault family, the controlling shareholder in LVMH. “We share the values of luxury, quality and product appeal,” said Della Valle, whose family will still own 63.64 percent of Tod’s following the sale. “This may represent an excellent reason to consider further opportunities to be taken in the future ahead.”

Analysts at Italian brokerage Equita said Della Valle’s decision to sell just a 6.8 percent stake to LVMH suggested he did not want to sell his company to LVMH in the near term and would attempt to turn around Tod’s on his own. “We believe that visibility remains low (on a turnaround) and that in the end a sale remains the most probable scenario,” they said.

In 2020, Tod’s posted sales of €637.1 million, down 30.4 percent from a year earlier. The company reported a net loss of €73.2 million compared with a net profit of €46.3 million the year earlier, omitting the payment of a full-year dividend for the second year in a row.

Equita estimates LVMH could acquire the rest of Tod’s at a price of about €40 a share, a 25 percent premium to the price for the 6.8 percent minority stake, with a total outlay equivalent to only about 0.4 percent of LVMH’s capital.