Italian fashion house Valentino has approached peer Giorgio Armani about a possible acquisition and the parties are in in early-stage talks, three sources familiar with the situation told Mergermarket.

The two companies’ management groups are in direct contact, the sources said. A deal would be Valentino’s first strategic step towards becoming a luxury conglomerate along the lines of LVHM [EPA:MC] and Kering [EPA:KER], the sources added.

Giorgio Armani could be valued at around 5bn, one of the sources said.

While Giorgio Armani saw EUR 250m EBITDA on EUR 6bn revenue in the 2021 financial year, this figure is lower than the EUR 450m recorded in previous years, as reported in the Italian press.

Armani himself has spoken in the past year about his openness to joining up with with another Italian player, citing changes brought about by the COVID-19 pandemic and wider industry trends that mean staying independent is no longer a necessity, as reported by Italian press.

This acquisition could prepare the ground for a potential exit from Valentino in coming years, most likely in the form of an initial public offering, two of the sources said.

This news service reported in October 2018 that Valentino’s planned listing of an up to 25% stake was on hold while the firm focused on improving growth ahead of an IPO.

Valentino declined to comment. A spokesperson for Giorgio Armani spokesperson said that the firm has seen attention from both private equity and strategic investors, but declined to comment further.

Valentino’s owner, Qatari sovereign wealth fund Mayhoola, did not return requests for comment.