Benetton shares trade above buyout offer

MILAN (Reuters) - Shares of Italian clothing retailer Benetton (BNG.MI) shot above the buyout price its controlling family is offering minority shareholders, as the market pins its hopes on the price being raised to reflect valuable real estate assets.

On Wednesday Edizione, the family holding company that owns 67 percent of Benetton, offered 4.60 euros per share to take full control of the debt-laden sweater maker, reshape its strategy and restore profitability.

The offer, which represents a 6 percent premium to the average price of the last 12 months, will cost the family up to 276.6 million euros ($365.06 million).

Industry watchers said the move came at the right time for the group whose shares lost 40 percent in 2011, dipping below 3 euros last month.

Valuable commercial real estate assets are seen as one good reason why shareholders should hold out for a higher price.

According to Cheuvreux a break-up of the group could lead to a valuation of Benetton above the 5 euro per share mark thanks to the real estate portfolio.

"At 4.6 euros per share, we would advise against delivering the shares. Too low," the broker said.

Benetton, which owns around 25 percent of the more than 6,000 stores that sell its goods worldwide, needs to revamp its retail chain in the face of tough competition from larger rivals such as Zara-owner Inditex (ITX.MC) and discount specialists like Britain's Primark (ABF.L).

At 1240 GMT, shares were up 16 percent at 4.72 euros, back from a session high of 4.85 euros.

HIGHER OFFER?

The retail estate portfolio, which has a net book value of around 650 million euros, is valued at around 1 billion euros, according to company indications provided to analysts.

"The market is betting on a possible higher offer. The real estate alone is worth more than what the deal values the company at," a Milan analyst said.

On Wednesday, the Benetton family said it had not taken any decision regarding eventual mergers, break-ups or other extraordinary moves.

"The company is very undervalued. I presume they have some strategic operations in mind," a banker familiar with the situation said.

The deal is seen as a good move for a group facing a difficult 2012 after seeing profits fall by 30 percent last year.

Benetton, which posted sales of over 2 billion euros last year, is also burdened by 400 million euros of debt expiring in September.

"It's a good deal for the family. But minority shareholders have already lost a lot of money, the company remains a value trap," another analyst said.

On Thursday Benetton said it had appointed Morgan Stanley as financial adviser and Gianni, Origoni, Grippo, Cappelli & Partners as legal advisers. ($1 = 0.7577 euros)

(Reporting By Antonella Ciancio, Sabina Suzzi and Stephen Jewkes; Editing by Jon Loades-Carter)